It was a strange audience and an even stranger crusade for the chairman and chief executive officer of one of America's largest corporations. American Airlines' Robert L. Crandall stood in front of a group of pilot union activists, urging them to join him in supporting Sen. Edward M. Kennedy (D-Mass.) in his "lonely" battle to require all employers to provide health insurance.

Crandall and a handful of other executives have endorsed the Kennedy bill to expand health care coverage to 24 million workers and dependents, arguing that their corporations are subsidizing other companies' lower costs.

In Crandall's case, his target is Continental Airlines, which covers considerably less of the health insurance costs of its workers than does American. Continental's lower labor costs give the airline an edge that it has used to advantage in marketing battles with American and other airlines.

"American Airlines does not object to paying its fair share of the heath costs of low income individuals and senior citizens," Crandall said in June, when he testified in support of the bill. "But we do object to paying for the health care costs of individuals employed by or retired from other businesses, some of whom may even be our competitors."

Walter B. Maher, director of employe benefits for Chrysler Motors Corp., has the same concern. Maher said his company finds itself picking up the tab for other companies' employes. "There is a temptation for employers not to provide insurance if they know their employe's spouse is well covered," he said. "Given the fact that our company is 85 percent male, 66 percent married and all well covered, I think you can understand our concern in this regard," he testified.

Despite support for the bill from American Airlines, Chrysler and a few other companies, corporate America has not rushed to embrace the Kennedy initiative. But -- significantly -- it hasn't rushed in the opposite direction either.

While the U.S. Chamber of Commerce and the National Association of Manufacturers oppose the Kennedy measure, many business officials are still undecided about whether to support the health proposal, according to benefits specialists and others familiar with lobbying on the measure.

"Major employers are pretty much sitting right on the edge and could fall either way in terms of support for the bill," said Mark J. Ugoretz, executive director of the ERISA Industry Committee, which represents more than 100 major corporations that provide health, retirement and other benefits.

"I think there is a growing number of mid-sized and larger employers who are saying -- if there can be a few more changes in the design of the bill, this might not be a bad idea," said Willis Goldbeck of the Washington Business Group on Health, a coalition of large employers interested in health care cost control.

The proposal requiring employers to provide health insurance has created some clear divisions in the business community. Generally speaking, retail and other service industries that rely heavily on seasonal and part-time employes oppose the measure. Small businesses are also wary.

There are key issues that could destroy the potential for other business support. Two of them are to what extent the bill mandates the shape of the insurance coverage and whether states are allowed to impose mandates for coverage on corporations.

The Senate Labor and Human Resources Committee plans one more day of hearings on the bill before it marks it up. And the bill is not likely to reach the Senate floor this year, because the committee emphasis will be on minimum wage instead. But the health proposal may well make it next year. There is also a chance, according to several observers, that legislation increasing the minimum wage and legislation mandating health insurance might converge at some point, with part of the increase in the minimum wage being accounted for by health insurance coverage. According to supporters of the insurance bill, the cost of the measure to employers would be approximately 40 cents per hour for a full-time worker.

"I think it is a developmental process and that, eventually, there will be some kind of national mandate passed to have employers provide health insurance, but I think the shape will be somewhat different from what Kennedy is proposing," said Sharon Canner, director of employe benefits for the NAM. The Chamber and the NAM say they are developing alternative approaches to the bill, including covering some workers by allowing them to pay premiums for Medicaid coverage.

All sides say they share Kennedy's concern about the uninsured. The number of Americans without health insurance rose an average of more than a million a year between 1980 and 1985 to 37.2 million that year, according to Kennedy's committee. Approximately two-thirds of those are members of families in which at least one member is working. Those are the 24 million who would be covered by the Kennedy bill.

"Clearly the problem of those who are not covered is severe and needs to be addressed," said James Klein, manager of pension and health policy for the U.S. Chamber of Commerce. But one major reason that corporations are not providing coverage is that it is expensive, he said. "I don't think requiring them to provide expensive care is the solution. It will only result in a lot of people losing their jobs."

In a Chamber survey of 145 companies, 23 percent said the bill would force them to eliminate some jobs and 65 percent said it would force them to reduce or eliminate other benefits or pay increases.

Lobbyists for business interests say they believe that the Kennedy bill as it is written might provide too little flexibility. The bill would cover full-time employes and defines full-time as more than 17.5 hours a week. It also requires that the insurance package offered to workers must include certain types of care, including diagnostic tests, pre-natal care and well-baby care. Employes at some companies -- for instance, those with older work forces -- might prefer other benefits, such as vision care, the lobbyists argue.

The bill also requires employers to pay 80 percent of the premium and employes to pay 20 percent, sets a limit on deductibles and requires coverage from the first day on the job.

"You're looking at a plan that major employers find is in excess of what they are offering," said Ugoretz.

While employers are concerned about where they stand in relation to what the bill would require -- whether it would cost them money or save them money -- they are also concerned "about what would confront them if the Kennedy bill doesn't pass," said Deborah Chollet, a senior research associate with the Employe Benefits Research Institute.

Of particular concern is "universal health care" legislation under consideration in Massachusetts. A key issue is whether it will result in a waiver of the federal preemption from state mandated benefits contained in the Employe Retirement Income Security Act. Business groups say they fear providing different benefits required by 50 different states. The Kennedy bill would reinforce federal preemption.

Also looming over the debate is that old specter, national health insurance. "All of this is really nothing more in my opinion than the beginning of reexamining whether health insurance should continue to be distributed through employment," said Goldbeck. "For the last 10 years, business people have said, 'Let us do it. We're doing our part well.' "

Unless business is willing to help close the gap that is leaving an increasing number of workers and their families uncovered, he said, "then the message back to government is that government has to do it. You move more from a commercial model to a government model."