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The plan -- which would provide insurance coverage for all children, regardless of their immigration status -- is expected to spark opposition from the medical profession, as well as many employers and unions, though the governor outlined incentives for each contributing party.

"I don't think it is a question or a debate if [children] ought to be covered ... The federal courts have made that decision -- that no one can be turned away," Schwarzenegger said. "The question really isn't to treat them or not to treat them. The question really is how you can treat them in the most cost-effective way."

Schwarzenegger's plan requires all Californians to have health insurance, though the poorest citizens' insurance would be subsidized. Under the governor's plan, all businesses with 10 or more employees would be required to offer health insurance to their employees, or pay 4 percent of their payroll into a state insurance fund.

The state government would step in and subsidize the roughly 1.2 million poor who do not qualify for state-paid health insurance. Those Californians would be allowed to purchase health coverage from a state government-run pool, and would be required to make small contributions toward their premiums.

Doctors and hospitals would contribute 2 percent and 4 percent of revenues, respectively, to help foot the bill, though the governor promised to increase the amount paid to both parties through Medi-Cal.

Under the governor's proposed plan, insurers would no longer be permitted to deny health coverage based on previous or current medical problems.

Schwarzenegger believes his plan will save California about $10 billion a year by reducing health care costs.

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