Congressional and labor backers of national health insurance to cover every American have reserved Madison Square Garden for an Aug. 6 rally to kick off a multimillion-dollar campaign to sell the idea.

Some are talking of a war chest of "at least $5 million," contributed largely by the United Auto Workers and other AFL-CIO unions to convince both the people and Congress that federally mandated health coverage for all is an idea who whose time has come.

But the decision on whether to start a truly massive campaign hinges on the outcome of current negotiations with the Carter administration over an acceptable plan.

"I don't think there's any doubt that if Carter comes up with a health plan that really puts meat on the bones, organized labor is ready to make a major commitment," said Max Fine, director of the Committee for National Health Insurance, whose board - including major labor leaders - will meet May 25 to discuss a campaign budget.

"If the president comes up with a bill we can support, it would be one of the decade's major issues, and there's no question but that we would make a major effort," said Steven Schlossberg, head of the UAW's Washington office.

Aides of Sen. Edward M Kennedy (D-Mass.), the leading congressional backer of far-reaching health insurance, said he is ready to chair coast-to-coast hearings of his Senate health subcommitte to stir interest.

But the Kennedy people, labor spokesmen and others supporting a national campaign also said some tough issues must still be decided before they will accept a Carter bill - and make the final decision to stage an all out rally and drive.

In 1949 the AMA hired the California publicity firm of whitaker and Baxter and spent between $3 million and $3.5 million to help defeat President Truman's national health insurance plan.

A Washington AMA official, David Baldwin, said there is "no sum in the AMA budget for political education and "there is no chance of anything come to a head in Congress this year anyway."

Fine pointed out that AMA committees spent nearly $1.8 million supporting selected candidates in 1976 congressional elections, and "by the AMA's own figures" its assets rose from $28 million in 1975 to $64 million last year, "leaving quite a bit for crusading when needed."

Will there be a lobor-backed health insurance drive if there is no agreement with Carter on an acceptable bill?

'I don't know ," Fine said. "It might not be the same kind of campaign. It might be smaller. But I think the majority of our board would support one, because our people are absolutely convinced that if there is no national health insurance legislation in the next two years, the issue will eb dead for a decade."

The issues go to the heart of what kind of health insurance, and even what kind of health care. Americans will get in the next few decades.

Among the issues are how strictly the administration is willing to regulate the health industry, especially whether it will insist on tight limits on the vast sums paid both doctors and hospitals. What Kennedy and labor seek is "prospective reimbursement with caps" - decicing in advance on a set annual sum for hospitals and doctors i neach part of the country with severe limits on both hospital charges and doctors' fees.

Another issue is whether to come closer to a plan now being offered by the Kennedy-labor forces - in which everyone would either buy or be given a uniform health insurance pacakage through a federally certified private insurer or medical clinic - or to one of a group of plans being considered by the administration, with a mixed private and public insurance system.

The Kennedy-Labor people claim the mixed system would perpetuate and even aggravate the nation's present two-class medical care, in which the poor and the dark-skinned and the aged often get treated in a separate, inferior system of public hospitals and clinics.

Another - and perhaps even more basic - issue is whether the administration will be willing to lanch a plan adding perhaps $30 billion a year to the federal budget, or whether the president will demand a more incremental approach. One such might cover only mothers and children or the catastrophically ill "at the start." Those who want broader coverage fear such a "start" could last for years.

Administration planners see all these issues not as matters of ideology, or rich versus poor, but as what the country can afford and wht kind of cost controls and other details will really work.

These issues have been the subjects of heated talks in the last two months between White House and Health, Education and Welfare Department officials on one hand, and the Kennedy-labor forces on the other. There have been l8 White House meetings in all since last December between the Kennedy-labor group and Carter officials, the last of them May 12. president Carter has attended three.

"We still don't know whether or not the administration is for real or not on this," Fine said. "I'm optimistic, I think, about getting an agreement. But then we'd still have to see an all-out administration and HEW effort to get a bill through Congress. We've been told there's that commitment - we'll know later."

A key Senate negotiator said, "Our discussions with HEW are proving very productive . We have a lot of things to talk about and agree on, but I think we're going to get together."Dr. James Mongan, deputy assistant secretary for health at HEW, said, "We're having constructive discussions," and he, too predicted success.

But all said they won't know the president's decisions before the end of the month, when he is expected to make a full statement of his health insurance plans.

If the decisions is "go," Fine said, "in my opinion a major health insurance campaign will cost even more than $5 million. It will need at least that much to succeed because no matter what we spend, the American Medical Association will spend two to three time as much to oppose us."

"I don't know." Fine said. "It might not be the same kind of campaign. It might be smaller. BUt I think the majority of our board would support one, because our people are absolutely convinced that if there is no national health insurance legislation in the next two years, the issue will be dead for a decade.