BOSTON -- In a small, battered auditorium at Boston University, 100 second-year medical students swap exam horror stories as they await the arrival of a guest lecturer, an outspoken critic of America's health care system.

Minutes later, a long-haired, harried-looking woman rushes in, wearing a denim jumper and black athletic shoes. Most of the students don't even notice. At 39, Steffie Woolhandler, chief of inpatient medicine at nearby Cambridge Hospital and an assistant professor of medicine at Harvard, doesn't look much older than these students. But when she begins to speak, the aspiring doctors are suddenly quiet -- struck not just by her powerful voice, which is softened by a rich Louisiana accent, but by her devastating critique of the health care system they are poised to enter.

It is the kind of speech Woolhandler gives often as national co-coordinator of Physicians for a National Health Program (PNHP), a nonprofit advocacy group she co-founded in 1986 with internist David U. Himmelstein and about 50 other doctors. The group's very name seems paradoxical (doctors for socialized medicine?) but its influence reflects a growing restlessness beneath the privileged surface of American medicine.

PNHP created a stir with its proposal, published last year in the prestigious New England Journal of Medicine, for a national health program modeled after Canada's. The plan, among the first to be introduced in the current debate about health care reform, was a signal that physicians, not just community activists or labor leaders, were increasingly frustrated.

Some members of the medical establishment denounced the plan, but other physicians were enthusiastic and the group doubled its membership -- to 2,000 -- overnight.

Today PNHP, headquartered in a cramped warren of offices at Cambridge Hospital, has a full-time staff person, a $100,000 annual budget funded by membership contributions and more than 3,000 members. In the past four years, the group has emerged as an important voice in the debate health economists say is likely to dominate the 1990s: how to design a more equitable system and rein in rising costs that threaten to bankrupt everyone but the rich.

Although medicine's conservative establishment, which includes the leadership of the American Medical Association, considers many of PNHP's ideas heretical, the group has become a force to be reckoned with. It is one of the first physicians' organizations to launch an assault on the basic tenets of the American health care system.

But it is not so much the medical establishment that PNHP's leaders seek to woo, but grass-roots groups which they hope will join them in agitating for change. Between them, Woolhandler and Himmelstein spend more than a week each month on the road, presenting their proposal for reforming the health care system to organizations ranging from the Screen Actors Guild to the National Association of Manufacturers.

PNHP was born out of its founders' frustration with what they regard as the decline of American health care, a system they say stymies doctors and badly serves increasing numbers of their patients. For Himmelstein and Woolhandler, this frustration had been growing since their years as interns. Both trained in public hospitals, where they were regularly confronted by the long delays and and often substandard care that tend to be the fate of low-income patients, particularly of the estimated 50 million Americans who lack adequate health insurance, as well as the 31 to 37 million who have none.

Woolhandler tells an emblematic story of a woman she treated for epilepsy during her residency. "She kept coming back to the hospital . . . and no one knew why she wasn't taking her medication. It was clear that if the seizures continued, she would die. Finally, when we talked to her in private, she said she simply couldn't afford the medication. She had six children and was working two jobs and she was embarrassed that she couldn't buy her medicine. But it embarrassed me to live in a country as rich as this one, where a person can't get the medication she needs."

It was experiences such as these, repeated with alarming frequency during the budget-cutting years of the 1980s, that led PNHP to examine -- and then embrace -- the Canadian system of health care. Members chose its system -- which is tax-funded and provides free health care to all residents -- in part because medical training and procedures there so closely resemble those in the U.S. But Woolhandler and Himmelstein emphasize that the Canadian system would have to be adapted to fit American needs and circumstances.

Woolhandler punctuates her speech, delivered at B.U. last May, with rapid-fire statistics and slides, launching into a spirited discussion of the inadequacies of American health care and the relative superiority of Canada's. She informs the students that Canadians go to the doctor or hospital of their choice, that their treatment is paid for entirely by the government and that the quality of care they receive is comparable to that in the U.S.

Some of the students look skeptical as she tells them that the Canadian health system lacks an entire level of bureaucracy Americans take for granted: Canadians spend 13 cents of every health care dollar on administration and billing, while Americans spend 23 cents.

One student's hand shoots up as he asks her The Question: "Don't they have rationed medicine in Canada?" he wants to know. It is this specter of "socialized medicine" that Woolhandler and Himmelstein must regularly confront, which remains the most formidable barrier to national health insurance.

Woolhandler acknowledges that there are waits for some kinds of surgery, such as elective coronary artery bypass, but she says the numbers are small and unleashes another barrage of statistics about the high rate of unnecessary surgery in the U.S. to bolster her contentions.

The student, however, is unconvinced. "Aren't you suggesting that we allow politicans to decide what kind of health care we should have?" he asks. "It's all socialized medicine, isn't it?"

Woolhandler clenches her fists as she paces across the stage. "In the U.S., we are rationing medical care based on ability to pay," she says. "This would be a tragedy if there were a shortage of medical resources in this country, but at this moment in the U.S., one of three hospital beds is lying empty. And you've all heard about the impending surplus of doctors." The students titter nervously.

"It takes a lot of effort to keep sick people out of empty doctors' offices and empty hospital beds," she adds. "In fact, we spend a tremendous amount of administrative time and money to keep needy patients separated from available resources."

PNHP founders David Himmelstein and Steffie Woolhandler met in 1978, when he was a resident at Highland Hospital in Oakland, Calif., and she was interviewing for a residency there. They had a lot in common. Both grew up in medical families; Woolhandler's father was a radiologist in Shreveport, La.; Himmelstein's father was a prominent surgeon, and his mother is a pediatrician and child psychiatrist. They shared an antipathy for the conventional golf-on-Wednesday life of doctors.

Theirs is a style reminiscent of Harvard Square of the 1960s, not of the stuffy traditionalism usually associated with Harvard Medical School, where both are faculty members. Himmelstein, 40, favors Birkenstock sandals and his hair is almost as long as Woolhandler's.

Although they have lived together since 1979 and have two daughters, Kayty, 3, and 5-month-old Gracie, Himmelstein and Woolhandler are not married. "Our lives are actually otherwise very conventional," says Woolhandler. "Maybe that's why we never bothered to get married."

They share half of a two-family house filled with books and toys a few blocks from Cambridge Hospital, a 182-bed Harvard teaching hospital, where Himmelstein is chief of the division of social and community medicine.

PNHP, he says, evolved largely as a response to Reaganomics. "All of us were frustrated that there was no leadership on this issue," he recalls. "It was 1986 and the policy debate consisted of Reagan saying, 'Let's cut things back,' and liberals saying, 'Don't cut!' There was no voice for fundamental change. So, we came up with the somewhat lunatic idea of starting Physicians for a National Health Program."

Although there is growing dissatisfaction with the cost and quality of American medicine, some experts say they don't believe that the kind of radical change PNHP espouses will occur anytime soon.

Arnold Relman, editor of the New England Journal of Medicine, questions whether Americans who can afford the best available care will ever favor a government-controlled program like Canada's that provides free health care for all its residents. "As a nation, we respond more to issues of freedom and opportunity than to issues of social justice," he says.

And a powerful segment of organized medicine is hostile to what PNHP advocates. "Certainly, there are strengths in such a system," William Jacott, a trustee of the American Medical Association, says of the PNHP plan. "The fact that everyone has access, for example. But Canadian physicians themselves say that access in Canada is access to mediocrity."

Last year, the AMA launched a campaign it said was designed "to alert the public and Congress to the dangers of a Canadian-type health care system." The campaign included advertisements in major newspapers and magazines. One ad showed a wistful little girl and the caption: "In some countries she could wait months for her surgery." Another asks, "Elective surgery: Should it be up to you, or a committee?"

While the ads didn't specifically name Canada, an AMA mailing to physicians was more explicit. "If you want a Canadian-type health care system in America, just throw away this note and do nothing," doctors were told.

Many Canadian physicians were offended by the AMA campaign. An editorial in the Canadian Medical Association Journal remarked that after seeing the AMA ads, "non-Canadians might be left wondering if any of us are still alive, given the pitiful state of health care here."

The AMA has sponsored its own reform program, which would expand access to health care by broadening government and employer health coverage. But the AMA's claims, as stated in one of its ads, "We already have the best health care system in the world, What we have to do now is to strengthen it," is not always well received -- even by other doctors.

Several months ago, the American College of Physicians, the nation's second-largest physicians' organization with 68,000 members, broke ranks, advocating a national health insurance program.

But the group stopped short of endorsing PNHP's call for a Canadian-style plan. Edwin Maynard, immediate past president of ACP and an internist at Massachusetts General Hospital, says he is not sure such a system would work in the U.S. "We agree with {PNHP} on many issues, but they have gone a step or two beyond where we are going at this point," he says.

Woolhandler and Himmelstein are pleased with the ACP's new position and say it reflects what they have been hearing from colleagues around the country: the current health care system is not only failing many patients, it has become unbearable for physicians as well.

"We share people's skepticism of government," says Woolhandler. "But a Canadian-type system means nationalized insurance, not nationalized medicine. Doctors and hospitals would still be in charge of medical decisions."

Himmelstein agrees. "Physicians are very, very dissatisfied with the direction that medicine has taken," he says. "Doctors are realizing they can no longer ignore health policy. It intrudes on their examining room and their hospital rounds; they get calls every day from insurers, or their patients don't fill their prescriptions because they don't have the money. It is incredibly frustrating when you can't do what ought to be done for your patients."

It is not in doctors' offices, however, but in Washington, that any overhaul of health care must begin. On Capitol Hill, there is consensus that the system is badly in need of reform but little agreement about what to do. The past year has seen an abundance of health care proposals from groups as diverse as the AMA, organized labor, the insurance industry and the conservative Heritage Foundation, as well as PNHP. But against a backdrop of deficit politics, competing interest groups and little leadership from the White House, observers agree that real change is unlikely to occur soon.

Rather than a Canadian-style plan, the recommendation earlier this year by a federal commission headed by Sen. John D. Rockefeller IV (D-W.Va.) was for a less dramatic change in the form of employer-mandated health insurance. Under that proposal, employers would have to provide insurance coverage or pay into a public program, which would benefit the uninsured. Most of the reform proposals now circulating on the Hill share this approach.

To better understand the political process they are trying to influence, Himmelstein and Woolhandler are spending this year in Washington. Woolhandler is on a fellowship sponsored by the Robert Wood Johnson Foundation, designed to teach mid-career health professionals about the way federal policy is made. Himmelstein is working for Public Citizen Health Research Group, an advocacy group founded by consumer advocate Ralph Nader. In their spare time, they are also working to further the cause of PNHP.

Both say they take a dim view of employer-mandated insurance because it falls short of the fundamental change they believe is necessary and will not control spiraling health costs. "The only way to set and enforce a budget is with a single-payer system," says Woolhandler.

But others contend that such a view ignores the reality that social change tends to be slow and incremental, not sudden and radical. "You have to view these questions from a political, rather than a substantive, perspective," says Ron Pollack, who directs Families USA, an influential Washington-based advocacy group for the elderly and their families. "Before there is passage of any health proposal, there has to be what I call the "Vietnamization" of the health care issue. Congress didn't do anything about Vietnam until it began affecting middle-class families. The middle class in this country is beginning to feel the pain of the health care crisis, but we aren't there yet."

Himmelstein and Woolhandler don't underestimate the resistance to PNHP's program, but they say they think their work is having some impact. While PNHP's proposal has attracted considerable interest in Congress, Woolhandler says the reponse by some lawmakers is: " 'We believe in what you are doing and think it is the best idea, but it's not politically feasible.' So we see our main job as working with people outside the Beltway to make it feasible."

To do this, PNHP chapters are working closely with citizens' groups to push reform measures on the state level. In Ohio, for example, PNHP is active in a coalition that supports a Canadian-style bill; more than a dozen other states are considering similar measures. Meanwhile, a group of Harvard lawyers is hammering PNHP's proposal into legislative form. Himmelstein and Woolhandler say they are optimistic that it will be introduced in Congress next year.

Will Physicians for a National Health Program lead to a fundamental reform of America's ailing system of medical care? The answer, in the view of some experts, is maybe. "PNHP presented a seminal, stimulating proposal that has sparked a lot of discussion -- and a lot of criticism," says Relman, editor of the New England Journal of Medicine. "In the end, I don't know if it will be seen as a milestone, or simply as an interesting contribution that helped further the debate."

Robert Evans, a Canadian economist and authority on the U.S. and Canadian health systems, has observed, "You Americans don't mind throwing people out of the lifeboat as long as you don't have to hear them scream." PNHP's work is based on the presumption that Evans is wrong, or at least that the screams are becoming too loud to ignore.

During Woolhandler's presentation at Boston University, one medical student asks, "Are you saying that a wealthy person should have the same health care as someone on welfare?"

Woolhandler responds that social programs designed to serve all sectors of society, like Social Security, tend to be the most equitable and efficient. But the student is insistent: "Do you really think someone on welfare should have the same health care as someone who has money?"

Before Woolhandler can answer, other soon-to-be doctors in the auditorium turn and answer with an emphatic "Yes!"

Constance Matthiessen is a staff writer at the Center for Investigative Reporting in San Francisco. Researcher Leslie Haggin also contributed to this story.