Does the practice of universal precautions mean you treat all people as if they have blood-borne diseases.?

Yes. Universal precautions came about during the AIDS epidemic. This is to use protective barriers such as gowns, gloves, face shields, masks, hand washing between patients. Additional precautions may be necessary in other infections such tuberculosis, small pox, anthrax and plague.
Yes. One would consider all contacts as potential points of exposure.