Sacramento -- Gov. Arnold Schwarzenegger today proposed upending just about every portion of the healthcare industry in one of the country's most elaborate efforts at holding down medical costs and expanding insurance to those who don't have it.

Schwarzenegger's plan, which he publicly unveiled at noon, would require employers with 10 workers or more to buy insurance for their workers or pay a fee of 4% of their payroll into a program to help provide coverage for the uninsured.

Schwarzenegger would tax doctors 2% of their gross revenue and place a 4% tax on hospitals. He campaigned for reelection on an anti-tax platform, but his administration argues that so many more people would have insurance that medical providers would make more money.

The governor also wants to ban insurers from refusing to offer coverage to some individuals because of their prior medical conditions. Insurers would also have to spend at least 85% of their premium revenues on patient care, a move that would limit the amount companies spend on administrative costs and profits.

In an effort to cover all Californian children, including ones in the state illegally, Schwarzenegger's plan would expand the state's Healthy Families program, providing insurance to children whose parents make less than three times the poverty level. That works out to about $60,000 for a family of four.

And Schwarzenegger said his plan would require every Californian to have health insurance.

"If you can't afford it, the state will help you buy it," he said, "but you must be insured."

Schwarzenegger called the delivery and payment of healthcare in California "disastrous," noting that nearly 1 in 5 residents is uninsured.

"The problem with that is, of course, that the rest of the people who have insurance pay for them," said the governor. "Those that are fortunate enough to have coverage - we are paying a hidden tax."

Schwarzenegger spoke by satellite from Los Angeles. Doctors treating his broken leg have ordered him not to fly more than once a week. The governor will fly to Sacramento on Tuesday to deliver his annual State of the State address.

All of these ideas are sure to engender opposition from the healthcare industry and their allies in the Legislature, which must approve any plan before it becomes law.

Anticipating a hostile reaction to his plan from many quarters, Schwarzenegger said that although it appears that some people lose and others win under this proposal, in fact the whole system would benefit.

"Everyone has been left here with a better deal," he said.

But Republican lawmakers and business groups have long argued against additional requirements on employers.

Two hours before Schwarzenegger unveiled his plan, Assembly Republican Leader Mike Villines (R-Clovis) joined with a trio of small business owners in a Thai restaurant a few blocks from the Capitol to announce that his caucus will resist any plan that places a mandate on employers. He called such mandates a "job tax," and stood at a podium alongside a large poster with those words circled and crossed through in red.

"If we put any form of mandate on a business, we are seeing a jobs tax," he said. "This isn't a philosophical discussion. This is a jobs discussion. This is the difference between employees having a job and a jobs tax that says no to that."

The governor's plan matches some elements of proposals put forth last month by the Legislature's top two Democrats. All plans build on an existing system, in which 71% of California employers offer workers health insurance.

All plans also include a "pay or play" element by which employers who don't offer health benefits must pay a fee to a state agency that would then negotiate with private insurers for worker coverage.

Last month, Senate President Pro Tem Don Perata (D-Oakland) proposed taxing workers and employers to cover an estimated 4.2 million of 6 million uninsured Californians, with a requirement that all employers - even those with a single employee - offer health insurance or pay the state a percentage of payroll. Perata would also require workers to prove when they pay taxes that they have health insurance.

The plan of Assembly Speaker Fabian Nunez (D-Los Angeles) would not force workers to show they have health insurance. He would exempt businesses with less than two workers, those with a payroll less than $100,000 and firms less than three years old.

This afternoon, Nunez called Schwarzenegger's plan "pretty much in sync with the proposal I laid out in December." He also called it "a good start."

Schwarzenegger agrees with Assembly Democrats, Nunez said, on many areas, including giving all California children health insurance, requiring insurers to accept all people regardless of their health status and requiring employers to either offer health benefits or help pay the cost of extending it to their workers.

"When it's all said and done, employers in California will pay a portion of their payroll deductions toward the cost of insuring their employees," said Nunez. "That will happen."

The speaker said the governor's plan could pass the Legislature on a simple-majority vote, which would not require any Republican support.

Republican lawmakers, who are a minority in the Assembly and Senate, have a seat at the table, Nunez said. But they are out of touch with mainstream Californians, he said, when they insist that children in the country illegally get no state-assisted health insurance. And they are wrong, Nunez said, in characterizing the governor's plan as a new tax.

"I don't think . . . that the governor and the Democratic Legislature ought to roll over or steamroll the Republicans in this process," said Nunez. "But I think we need to have an honest discussion about what's a real mandate and what's not a real mandate.

"The mandate is a hidden tax of $1,200 that each of us has to pay because there are employers out there who would rather increase that rate of profit and put it in their pocket than to pay a portion of the healthcare costs of their employees," Nunez said. "That's a tax."