The Senate Health Committee defeated the bill 7 to 1, with three abstentions. Both Democrats and Republicans voted against the bill, saying that it was too costly at a time when the state is facing a $14.5 billion budget deficit.
"It doesn't matter if there are these good things in the bill if there isn't the money to pay for them," Sen. Sheila Kuhl, the Democratic chair of the committee, told the Los Angeles Times. "We can't simply say to the people of California, 'Go buy insurance.'"
The measure would have required all Californians to obtain coverage, provided subsidies for low-income residents, required many employers to provide insurance, and required insurers to accept all applicants rather than weeding out less healthy customers. Taxes on cigarettes and hospitals would have helped pay for the plan.
But the bill, a compromise agreement pushed forward by Schwarzenegger and the state Assembly's Democratic speaker, Fabian Nunez, had opponents on all sides.
Tobacco companies and employer groups, who would have faced new financial burdens, lobbied against it. But so did other groups, such as some consumer advocates and the California Nurses Association, who generally favor health care reform. Many of those opponents said that the plan would be a giveaway to private health insurers, because it required people to buy private insurance with high deductibles.
"The fatal flaw in this thing was requiring people to buy health insurance without controlling the costs of a policy," Democratic political consultant Garry South told the San Diego Union-Tribune. "That could be a windfall for insurance companies."
The proposal passed the California state Assembly last month, but rather than scheduling an immediate Senate vote afterwards, Senate President Pro-Tem Don Perata asked the nonpartisan Legislative Analysts Office to analyze the bill.
The office found that the measure could cost billions of dollars more than planned if health care premiums rise slightly more than projected -- lending the bill's opponents added support.
In a statement after the vote, Schwarzenegger said that he wasn't finished with the issue of health care reform.
"I am someone who does not give up, especially when there is a problem as big and as serious as health care that needs to be fixed," he said. "One setback is just that -- a setback."
