California is considering creating the first government-funded, universal healthcare system in the US for state residents. The proposal, which lawmakers will begin debating on Tuesday, would adopt a single-payer healthcare system that would replace the need for private insurance plans.

Lawmakers are debating two bills – one would create the universal healthcare system, another would outline plans to fund it by increasing taxes, especially for wealthy individuals and businesses. The sweeping healthcare reform faces significant hurdles, including opposition from powerful lobbies for doctors and insurance companies. If the bills are approved by the legislature, voters would ultimately have to approve the taxes to fund the new system in an amendment to the California constitution.

California has tried and failed to replace private health insurance with a universal, state-funded program for years. Voters rejected such a proposal in 1994 and state lawmakers failed to find a way to fund a single-payer health system in 2017.

Attempts to create universal healthcare nationally have failed to gain traction despite being promoted by prominent progressive lawmakers, including 2020 presidential candidate Senator Bernie Sanders. State legislatures in Vermont and New York have also tried and failed to create universal healthcare plans.

“There are countless studies that tell us a single-payer healthcare system is the fiscally sound thing to do, the smarter healthcare policy to follow, and a moral imperative if we care about human life,” said the California assemblyman Ash Kalra, who authored the proposal.

California’s governor Gavin Newsom, a Democrat, campaigned for office in 2018 with the promise of helping usher in a single-payer health system but is facing re-election this year without making clear whether universal healthcare is still a priority.

“I think that the ideal system is a single-payer system. I’ve been consistent with that for well over a decade,” he said on Monday at a news conference. But he said he had not “had the opportunity to review” the plan being debated by legislature.

In the meantime, Newsom on Monday unveiled his own proposal to expand access to Medi-Cal, a state-run healthcare program for low-income Californians, to extend eligibility to all residents regardless of immigration status. Newsom’s plan proposes spending $2.2bn a year to expand Medi-Cal eligibility for all low-income residents, after years of incrementally including first undocumented children and then seniors in the program.

The proposal, if approved by California’s legislature, would expand health coverage for about 700,000 additional people. If it gets final approval this summer, it could take effect by 2024.

Although inequities in healthcare access exacerbated by the Covid-19 pandemic have intensified calls for healthcare reform, efforts to institute a universal health system, or even a public healthcare option, have historically faced implacable opposition from powerful private healthcare lobbies.

The Affordable Care Act (ACA), which expanded healthcare in the US, created insurance market exchanges where people without employer-sponsored insurance could shop for coverage and subsidies to help Americans afford insurance. The legislation dramatically expanded healthcare access, but stopped short of creating a public, government-run healthcare option. Despite reforms enacted by the ACA, medical bills remain the leading cause of debt for Americans.

Were California to adopt a universal healthcare system, the state would funnel state and federal dollars allocated for healthcare into a single, government-run program. The insurance industry and business groups are rallying against the proposal, which would be paid for with higher taxes mostly on the wealthiest individuals and businesses, but would increase taxes for all but the lowest-earning Californians.

Supporters of the plan say that despite the taxes, employers and individuals would pay less for health coverage overall. A state-run system would also include more benefits, more cheaply, by eliminating the need to account for insurance company profits.

The California Nurses association over the weekend held demonstrations in favor of the universal healthcare proposal. “As nurses, we’ve seen patients get care delayed or denied because they could not afford it,” said Cathy Kennedy, president of the California Nurses Association. “This for-profit healthcare system has cost lives, all so that a few health insurance executives can line their pockets.”