Universal health care is normally an issue raised by left-wing Democrats, but Schwarzenegger used the issue to help gain re-election in November 2006, which he did thanks to Democratic support.
"Our health care system is broken, and the people expect us to fix it, and this is exactly what I'm trying to do," said Schwarzenegger, speaking at an event that included legislators, business leaders and health care representatives in the southern city of San Diego.
The former Hollywood action hero, now 60, said that it was "inexcusable and ... embarrassing" that nearly a sixth of all residents in California, the wealthiest and most populous US state, lack health care.
According to the US Census Bureau "there are more Californians now uninsured than ever in the history," said Schwarzenegger.
"We need a system where people can buy insurance regardless of age or of medical history. Everyone should have the right to be able to buy insurance without being turned away."
In the United States health care needs are covered by employers, and those without jobs must pay a steep price to keep their health coverage or rely on the slow service at the emergency rooms of public hospitals.
Schwarzenegger is proposing a system that would be financed by employers, hospitals and the government.
Every business with more than 10 employees will be ordered to provide health care for their workers, or pay into the state health care system.
The plan, however, has to be approved by the state legislature, where passage is uncertain.
Only the north-eastern US state of Massachusetts has a statewide universal health care system, introduced in 2006.