President Clinton's new health proposal offers the right goal but the wrong way of achieving it. The latest Clinton plan would add more patches to a fragmented system whose very fragmentation is a big part of the problem. It would intensify reliance on market forces that resist insuring or treating the sick and then leave government holding the bag.

In 1997, as part of the budget deal, Congress and the White House agreed on a new Children's Health Insurance Program, or CHIP. This program itself is a fragmented mess. It gives the states additional money to insure for poor kids, but requires state matching funds. It has complex eligibility requirements.

Most states have balked, because they don't want to be stuck with additional outlays in the next recession. More kids are without insurance now than in 1997, because many former welfare families have lost their Medicaid coverage.

Clinton would give parents in poor families the right to get health coverage under CHIP or Medicaid, by giving the states additional federal funds. In addition, he offers tax credits for people with long-term care needs, and for people who lost health insurance when they lost a job. And he would resurrect a previous proposal to allow people as young as 55 to buy into Medicare. A 25 percent new tax credit would subsidize the buy-in.

Another Clinton proposal would convert Medicare into a "premium support" program, similar to a voucher. People 65 and over would get a set sum from the government that would be sufficient to buy conventional Medicare; or the money could be put toward purchase of private insurance. People would be free to supplement the federal allotment with their own money--or not.

Most seniors could not afford to purchase comprehensive, top-quality insurance. Clinton would sweeten this policy change by adding a partial drug benefit to Medicare. It would cover 50 percent of prescription drug costs, up to an annual ceiling.

Step back a minute and consider what is really wrong with the health system. For one thing, it relies too heavily on employers, at a time when people no longer have lifetime jobs. For another, it relies too heavily on profit-motivated managed care companies, which make money to the extent that they can enroll people who don't get sick and can deny sick people care. A third problem is that more people--44 million at last count--don't have insurance at all. A fourth is the fragmentation itself. Change a job or lose a job and you have to change doctors, if you can get insurance at all.

Clinton's latest plan mainly addresses the problem of the uninsured. But it increases the reliance on managed care companies, and it compounds the fragmentation. Why this approach and why now? The answer is one part budget politics and one part election politics.

The latest Congressional Budget Office projections forecast that the 10-year budget surplus could be a trillion dollars more than previously estimated. That means Republican presidential contender George W. Bush, who has been loudly declaring that we can afford both to shore up Medicare and Social Security and bestow a tax cut is looking like a seer. The Clinton-Gore position, that we must choose between tax breaks and saving social insurance, has suddenly been overtaken by the numbers.

So Clinton needed a way to shovel out some additional federal money, and fast. Polls show that more than 70 percent of Americans support expanded health coverage. Voila! A $110 billion health program--with something for kids, the working poor, the unemployed and the elderly. Better yet, the $110 billion price tag upstages Bill Bradley, whose $65 billion proposed program was seen as bolder than Al Gore's.

The $110 billion, incidentally, is a 10-year figure. That's $11 billion a year. The health care system currently spends about $1.2 trillion a year. Increasing that by less than one percent is not going to do much for the 16 percent of Americans with no insurance.

If we are going to make incremental progress toward insuring all Americans, here is a better idea: Start by insuring all kids--not with a patchwork of Medicaid, CHIPS, CHIPS-plus, and private insurance but with a single universal program. That would simplify the system and point us in the direction of true universal care. It could gradually be expanded to other age groups. The Republican Congress won't pass it this year, but it won't pass ClintonCare either. Let's at least point the national debate toward a goal worth eventually winning.

The writer is is co-editor of The American Prospect.