Gov. Arnold Schwarzenegger unveiled a $12 billion health care plan Monday that requires employers to provide health insurance or pay a fee to the state reviving the "pay or play" concept that was killed three years ago in a business-backed referendum.

However, the governor's proposal is expected to cost businesses less and is linked to an individual mandate requiring all Californians to have some form of health insurance widening the pool of insured residents so employers won't have to subsidize the costs of the uninsured.

"My solution is that everyone in California must have insurance. If you can't afford it, the state will help you buy it, but you must be insured," said Schwarzenegger, in remarks delivered from Los Angeles.

As part of his plan, all employers with at least 10 employees must either provide insurance or pay a fee equivalent to 4 percent of their payroll into a state fund to subsidize the costs of basic insurance that uninsured residents can buy.

A similar proposal requiring employers to provide health insurance or pay a fee into a state fund was enacted three years ago, but employer groups put that law up for a referendum vote and it was overturned.

Employer groups appear to remain just as opposed to a "pay-or-play" mandate this time around. The California Manufacturers and Technology Association issued a statement Monday afternoon:

"California manufacturers provide health benefits for their employees and their families more than any other business sector 74 percent. More manufacturers would like to provide health benefits, but rising costs are making it very difficult to do so. For this reason, reducing the cost of health care should be the primary focus for reform," the statement read.

The governor's plan also would require insurers to offer insurance to all applicants, with at least 85 percent of insurance premiums being spent on patient care. It would increase the Medi-Cal reimbursement for doctors by $4 billion and cap profits by the major insurers. Schwarzenegger said insurers would do well despite the cap given 5 million new policyholders.

Schwarzengger's plan also would cover people not in the country legally, a provision that's already drawn fire from fellow Republicans.

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