California Governor Arnold Schwarzenegger says he will veto legislation that would create a single-payer healthcare system for providing health insurance coverage to all California residents.

Under the legislation (SB 840), the state would replace private companies in providing healthcare insurance. The legislation would prohibit private companies from selling health plan and health insurance contracts for services provided by the state system.

Private healthcare providers would remain private under the bill. The legislation would just change how they are paid for services (that is, through the state system instead of private insurance companies).

The legislation, which lawmakers approved in August, would create a new state agency to administer the single-payer healthcare system.

Opponents of the single-payer system argued that the system would be less efficient and that healthcare costs would actually increase.

In an op-ed in the San Diego Union-Tribune, Schwarzenegger wrote that the "bill would require an extraordinary redirection of public and private funding by creating a vast new bureaucracy to take over health insurance and medical care for Californians--a serious and expensive mistake. Such a program would cost the state billions and lead to significant new taxes on individuals and businesses, without solving the critical issue of affordability."

Proponents argue that the single-payer system would boost healthcare coverage and that the current system diverts billions of dollars from healthcare services to administrative costs.

In April, lawmakers in Massachusetts approved legislation that requires all state residents to obtain healthcare insurance by July 1, 2007. The law includes incentives to encourage greater healthcare coverage. Employers with 11 or more full-time employees will have to pay a fee to the state if they fail to provide healthcare insurance to employees and make a fair and reasonable contribution to the coverage.