California is poised to become the first US state to offer government-provided healthcare to some immigrants who are in the country illegally.
State Democrats agreed on Sunday that adults between the ages of 19 to 25 should have access to Medi-Cal, the state's low-income insurance programme.
The measure must still be approved by the full legislature and be signed by the state's Democratic governor.
The $98m (£77m) plan aims to provide coverage to 100,000 people.
To help pay for the plan, which is part of the latest state budget, lawmakers have proposed taxing people who do not have health insurance.
The penalty is similar to the so-called "individual mandate" which had been federal law after the passage of the Affordable Healthcare Act, also known as Obamacare, until Republicans in Congress eliminated it in 2017.
Health coverage under the budget plan will not be provided to all immigrants - and only to those that qualify under the state's version of Medicaid - the federal low income health programme that was expanded under President Obama.
"California believes that health is a fundamental right," said Los Angeles Democratic Senator Holly Mitchell, who led the budget negotiations.
The budget comes after Democratic lawmakers, who dominate the state capitol, scrapped a proposal to provide Medi-Cal coverage to adults over 65 years old.
The expansion of coverage to the elderly was opposed by Governor Gavin Newsom who noted that the plan would cost $3.4bn.
Republicans have decried the budget initiative as a tax on American residents for not having insurance in order to provide healthcare to those in the country illegally.
The $213bn budget deal, which Governor Newsom expressed support for in a statement on Sunday night, covers the new fiscal year that begins 1 July.
State lawmaker have until 15 June to pass the budget, or risk losing their pay.