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You haven't heard much talk in Washington about a big fix for health care since Hillary Clinton's effort crashed in 1994 and almost took her husband's presidency with it. But the problem of rising costs and diminishing coverage hasn't gone away; it has got worse, to the point where some states now devote more of their budget to Medicaid than to education. Health fears always rank near the top of voter concerns.

So reform is back in a big way--only this time, the push is coming from the states. Massachusetts passed a program last year requiring nearly all its citizens to carry health coverage. Maine and Vermont have moved to guarantee everyone health care as well. And now comes the boldest move, from California, where Republican Governor Arnold Schwarzenegger aims to extend coverage to almost all the 6.5 million uninsured residents of the nation's largest state.

Some elements of Schwarzenegger's plan are strikingly similar to the failed Clinton plan--most notably, a requirement that employers provide coverage for their workers. California's mandatory-coverage rule would apply to businesses with 10 or more employees and give them an option to put 4% of their payroll into a state fund instead.

The parallels have not been lost on Senator Clinton. "There are only a very few ways of getting there," she told TIME in an interview. "That's what everyone is finally recognizing." Schwarzenegger also borrows from the Massachusetts plan a requirement that individuals carry health insurance--the way car owners must have auto insurance--with subsidies for the state's 1.2 million poor. He would pay for part of it with new taxes on hospitals and doctors and offer coverage to illegal immigrants--all controversial ideas.

Since Clinton's plan died, the Federal Government has attacked health care only at the margins--by covering more children, for instance, and narrowing the parameters by which insurance companies can deny coverage. Oregon Senator Ron Wyden, a Democrat, proposed a universal-health-care bill in December, but it has got virtually no help from the Democratic leadership. In the last election, House Democrats made only narrow promises on health-care coverage in their "Six for '06" agenda, including Medicare prescription-drug reform and the funding of stem-cell research.

But some believe the political climate around the issue is changing as the problem gets worse. "It is harder for anyone to claim that the market will correct itself if only government would stay away," says Ira Magaziner, the policy guru behind the Clinton plan.

Clinton says lawmakers will be watching closely to see how California and other states fare in trying to solve a national problem that Washington has abandoned. "We'll learn a lot about what works and doesn't work," she says. "We're certainly going to see the political hurdles … There isn't anybody in the country who knows more than I do how difficult this is."

At least one Republican Governor will soon find out.

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By Karen Tumulty