SAN FRANCISCO --
by John Boitnott, Web Producer

The Senate Health Committee on Monday rejected Gov. Arnold Schwarzenegger's ambitious effort to reform the state's health care system, voting it down 7-1.

Only one of the committee's seven Democrats supported the bill. All four Republicans opposed ABx11.

SLIDESHOW: Schwarzenegger Visits SF, Talks Budget

Even Senate President Pro Tem Don Perata, a co-author of the bill, came out against it.

“Despite the Senate’s rejection of our comprehensive health care reform bill, I want the people of California to know I will not give up trying to fix our broken health care system," Schwarzenegger said. "The issue is too important and the crisis is too serious to walk away after all the great progress we have made. The problems will not disappear. In fact, they are likely to get worse."

The Democrats who voted against the bill or failed to vote said they were afraid the cost of the program would be too great, especially as California faces a $14.5 billion budget shortfall.

"It doesn't matter if there are all these good things in the bill if there's not sufficient funding to pay for them," said Sen. Sheila Kuehl, the Santa Monica Democrat who chairs the committee.

"This proposal is fundamentally flawed and I cannot in good conscience support it because it requires every individual in the state of California to have health care insurance," said state Sen. Leland Yee, D-San Francisco.

It was a bitter defeat for Schwarzenegger and Assembly Speaker Fabian Nunez, D-Los Angeles, who spent months trying to craft a deal that majority Democrats could accept.

San Francisco Visit

Schwarzenegger visited San Francisco Monday to discuss his state budget proposal as prospects looked dim for the health care plan at the state Capitol.

He spoke at the Ferry Building with the Bay Area Council Economic Institute, which includes local elected officials and business, community and education leaders.

In Sacramento, hundreds of medical students rallied for universal health care that would not include insurance company participation, NBC11's Mike Luery reported.

The Schwarzenegger plan would have covered nearly 4 million people currently uninsured and would have allowed insurance companies to make decisions connected to patient care.

The plan struggled to find support from Democrats and Republicans alike.

“I am someone who does not give up," Schwarzenegger said. "Especially when there is a problem as big and as serious as health care that needs to be fixed. One setback is just that -- a setback. I still believe comprehensive health care reform is needed in California. We will keep moving forward. I can promise you that.”

The California Nurses Association and the Teamsters, among others, opposed the plan.

Hopes for the bill's success were also hurt last week when a nonpartisan legislative analyst concluded the program could add billions to the state's debt.

“Hard-working Californians will still live in fear of having their coverage terminated if they get sick or of being denied coverage due to a pre-existing condition," Schwarzenegger said. "Medical bills will still drive millions of people into personal bankruptcy. Too many people will still be one serious illness away from financial disaster. A mother with a sick child will still wait up to 10 hours in a jam-packed emergency room unless we stabilize hospital finances and get more people covered. Businesses and families will still get hit with double-digit cost increases until we rein in those costs."

The governor submitted his proposed budget for 2008-09 on Jan. 10.

At the same time, Schwarzenegger issued proclamations declaring a fiscal emergency and calling a special session of the Legislature to address the $3.3 billion budget gap for the current year.