SACRAMENTO — Endorsing a universal healthcare deal that some hailed as historic, the Assembly on Monday approved a bill that would ensure that nearly all Californians — and every child — have health insurance.

"California has taken a giant step forward on something that many people thought could not be done," said Gov. Arnold Schwarzenegger. "This will make the lives of people better."

Under the bill, all employers would be required to either provide health benefits to workers or pay fees of up to 6.5 percent of their payrolls into a state insurance-purchasing pool.

Most individuals not covered by a work-based plan would be required to pay insurance premiums up to 5.5 percent of their family income and would receive subsidies or tax credits if their costs exceeded that amount.

In addition, insurance companies would be prohibited from denying coverage to anyone based on age or medical condition, and would also be required to spend no more than 15 cents of each premium dollar on administrative costs and profits.

Supporters estimate that at full implementation, the bill's provisions would extend coverage to 70 percent of the state's 5.1 million uninsured residents.

The proposal must still be approved by the Senate, which has yet to schedule a vote. In addition, a companion financing measure must be placed on the ballot and approved by voters in November.

Senate President Pro Tem Don Perata, D-Oakland, insists he will not call in the Senate before the end of the year, but supporters of the bill say there is an urgent need for action.

If the Senate were to delay a vote until early January, proponents would have to collect about 1.2 million signatures in less than 50 days in order to get an initiative on the ballot, which would be a near-record pace.

The Assembly vote was 46-31, along partisan lines with majority Democrats in support.

Although more hurdles lie ahead, the vote was enough to kick off a crowded news conference in the Capitol Rotunda attended by a diverse group of supporters including Republican Gov. Schwarzenegger, Democratic Assembly Speaker Fabian Nuñez, Service Employees International Union President Andy Stern and Safeway Chief Executive Officer Steve Burd.

"This brings us one step closer to making healthcare a right afforded to everybody in this state, and not just a privilege afforded to those with deep pockets," Nuñez said.

Stern, who played a key role in consolidating labor support over the past few weeks, called the agreement in California "a pivotal moment" that will show the rest of the nation that universal healthcare can be achieved. "History will show that California was the tipping point," he said.

Stern said he had discussed the agreement with the campaigns of the three leading Democratic presidential candidates and predicted that Sen. Hillary Rodham Clinton, Sen. Barack Obama and former Sen. John Edwards would each publicly endorse the California plan "within 48 hours."

He noted that the plan approved by the Assembly is similar to national healthcare proposals the leading Democratic contenders have proposed, and to the plan that Republican presidential contender Mitt Romney orchestrated as governor of Massachusetts.

'I believe it will do nothing'

Republicans in the Assembly were unanimous in opposition, and a number of GOP members castigated the plan as an ill-timed measure that will harm the state's economy and fail to deliver on its promise of reducing premiums for those who now have health insurance.

"I believe it will do nothing to make healthcare more accessible or affordable," said Assemblywoman Audra Strickland, R-Moorpark.

Assemblyman Pedro Nava, D-Santa Barbara, who voted for the bill, said his was a good vote "for the 150,000 people in Ventura County without health insurance, including 32,000 uninsured children."

Safeway CEO Burd, one of the business community's leading advocates nationwide for healthcare reform, called the Schwarzenegger-Nuñez agreement "a game-changer," but acknowledged there remains much work to be done to get it enacted in California.

"If I could use a football analogy, I think we're in the red zone," he said.

Three funding provisions

It is unclear when supporters will finish writing the proposed initiative and submit it to the attorney general to begin the process of qualifying it for the ballot.

Some backers said multiple versions of an initiative could be submitted before the Senate votes, a move that would speed the process and still give the Senate some leeway to decide the final plan.

The initiative would include three major funding provisions for the $14.4 billion program: the employer fee, a cigarette tax increase of either $1.50 or $2 per pack, and a 4 percent tax on hospital revenues.

A fourth major funding source would be the infusion of more than $4 billion in additional federal Medicaid funds (Medi-Cal in California) that could be accessed as a result of the hospital tax.

The state would use those revenues as its share of higher payments to hospitals. The federal government would provide a dollar-for-dollar match of the added state funds.

The California Hospital Association supports the proposed tax as a means to increase Medi-Cal payments that are now so low that some hospitals — including Simi Valley Hospital — have decided to stop accepting Medi-Cal patients except on an emergency basis.