President Barack Obama told Congress on Wednesday the time for bickering is over and called for quick action on a broad healthcare overhaul that would dramatically transform the U.S. health system and insurance market.

In a sometimes emotional speech, Obama said lawmakers were closer to the goal of reform than we have ever been and spelled out proposals he said would improve stability for those with insurance and expand the options for those without, including a controversial government-run public option.

He issued a sharp rebuke to critics of his healthcare drive, accusing them of substituting scare tactics for honest debate.

I will not waste time with those who have made the calculation that it's better politics to kill this plan than improve it, he told a joint session of Congress and a national television audience. If you misrepresent what's in the plan, we will call you out.

Democrats gave Obama frequent standing ovations and Republicans at times murmured unhappily and held aloft copies of a Republican-sponsored healthcare bill. One Republican lawmaker shouted you lie when Obama said his plan would not pay for healthcare for illegal immigrants.

Lawmakers laughed openly when Obama said there remain some significant details to be ironed out.

Obama hoped the speech would rejuvenate his flagging push for an overhaul of the $2.5 trillion healthcare system, which has bogged down in Congress amid a flood of criticism and disputes.

He said his overhaul would cut healthcare costs, improve care, regulate insurers to help protect consumers and expand coverage to more than 46 million uninsured Americans. He repeated his pledge that the proposal, which would cost $900 billion over 10 years, would not increase the budget deficit.

As promised, he spelled out several concepts he wanted to see included in any final bill passed by Congress, including creation of an insurance exchange where individuals and small businesses could shop for policies.

He also reiterated his support for a government-run insurance plan -- the so-called public option -- that has drawn strong opposition from critics who say it would harm insurance companies and amount to a government takeover of the industry.

But he made it clear the lack of a public option in any final bill would not be a deal-breaker.

The public option is only a means to that end -- and we should remain open to other ideas that accomplish our ultimate goal, he said.

CLASH ON PUBLIC OPTION

Earlier in the day in the Senate, months of bipartisan Finance Committee talks by the so-called Gang of Six negotiators moved into the final stages as the panel's Democratic chairman, Max Baucus, said it was time to proceed with or without Republicans.

Baucus told reporters he would push ahead with a bill next week modeled after proposals he distributed recently to members. That plan would levy a fee on insurers to help pay for coverage but would not include a government-run health insurance option, which he said cannot pass the Senate.

Baucus's plan also includes sweeping insurance market changes. It would tax insurance companies on their most expensive healthcare policies and offer tax credits to individuals and families to help offset the cost of premiums.

Three committees in the House of Representatives and one other Senate panel have completed work on a healthcare bill, leaving the Senate Finance Committee as the final hurdle before each chamber can take up the issue.

But Republicans have balked at the total cost, questioned Obama's pledge the plan would not increase government debt and called some of the proposals a first step to a government takeover of healthcare.

In a bid to win Republican support, Obama proposed a series of state demonstration projects on medical malpractice reform, a long-sought goal of Republicans. He also endorsed a proposal from Republican presidential foe John McCain for a insurance pool for high-risk consumers.

He said he would prohibit insurers from dropping coverage for sick patients and capping coverage in a year or lifetime, would place a limit on out-of-pocket expenses, and require insurers to cover routine check-ups.

Individuals would be required to have insurance under Obama's plan, but he promised tax credits to individuals who cannot afford it.

He said reducing waste and inefficiency in Medicare and Medicaid -- the healthcare plans for the elderly and poor -- would pay for most of the plan, with the rest coming from a fee on insurers who would benefit from tens of millions of new customers.

(Additional reporting by Patricia Zengerle, Steve Holland, Susan Cornwell, Donna Smith, Ross Colvin; editing by Jackie Frank)

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