SAN DIEGO -- Gov. Arnold Schwarzenegger said Friday in San Diego that the mood is right in Sacramento to reform the state's health care system to cover an estimated 6.5 million uninsured Californians.

The governor held a news conference at a Rancho Bernardo restaurant to talk about his plan. It calls for higher Medi-Cal payments for doctors and new fees for employers who don't provide health insurance for their workers.

It also mandates that all residents buy health insurance and provides subsidies for those who can't afford it.

Democrats, who control the Legislature and have their own proposal, have challenged the governor's plan. Even some GOP lawmakers say there is not enough time to debate such a wide-ranging proposal. The Legislature adjourns in two weeks.

But Schwarzenegger, flanked by local business and health leaders, said Friday he is confident he can broker a deal.

"The mood in Sacramento is a good mood," he said. "(Democrats) understand that this is a rare opportunity that we have. They have different ideas, but I tell you there's a willingness to work together and to make this work."

On Thursday, Democrats backed off from a vote of no confidence on the governor's plan after Schwarzenegger met with Assembly Speaker Fabian Nunez, D-Los Angeles. A spokesman for Nunez said after the meeting that they were making progress in talks.

The Democrats' plan would require employers to spend at least 7.5 percent of their payroll expenses on health care or pay into a state fund. In the governor's plan, businesses would pay about half that amount.

The governor said last month that he would veto the Democrats' plan if it relied solely on businesses for funding.

"I know that this will not be easy, but piecemeal reform is not an option," Schwarzenegger said Friday.

Several business, health care and political leaders who attended the news conference said they agreed with the governor's plan.

"As a health care provider and one who lives inside this crisis every day, I can tell you there is no silver bullet," said Chris Van Gorder, president of Scripps Health that operates five hospitals in the county, including one in Encinitas.

Schwarzenegger announced his $12 billion reform plan in January.

Under his plan, individuals would be required to carry health insurance, but many of the state's poorest people would be covered under Medi-Cal, the state's Healthy Families Program, or a state health insurance pool.

The state would subsidize the estimated 1.2 million low-income people who do not currently qualify for coverage under Medi-Cal. They would be able to buy insurance through a state-run pool and will have to make a small contribution toward their premiums.

All uninsured children whose families earn less than 300 percent of the federal poverty level -- or up to $60,000 for a family of four -- would be eligible for state subsidized coverage programs.

The Associated Press contributed to this report. Contact staff writer Edward Sifuentes at (760) 740-3511 or esifuentes@nctimes.com.