"We need to rely on time-tested market principles rather than the placebo of government control, and on human compassion rather than corporate disinterest to focus assistance on the most vulnerable in our society -- children and the elderly," McCain said in a draft of a speech he planned to give today.

The Arizona senator arrived in South Carolina from Iowa well after midnight, following the final GOP debate of 1999. He and front-runner George W. Bush sparred over taxes, farm subsidies and campaign finance reform in an encounter that underscored how McCain has emerged as the most serious challenger to the two-term Texas governor.

He holds a slight lead over Bush in New Hampshire polls, but trails by wide margins on other states, including South Carolina. The state's Feb. 19 primary is critical to McCain's longshot campaign for the nomination.

As he does on taxes, education and virtually every other campaign issue, McCain is making a connection between health care reform and his push to change campaign finance laws. "No reform is possible until we give our government back to the people," he said.

A patient's bill of rights, for example, is stuck in Congress because special interests hold sway over both parties, McCain said. "Republicans want to protect insurance companies from lawsuits," he said. "The Democrats want to let the trial lawyers sue anyone for anything."

His answer: Disputes between HMOs and patients should be resolved by an independent third party. If that doesn't work, McCain said the patient must have a right to sue. "No politician has a right to take that away," McCain said.

His position is similar to a system in Texas, though McCain's staff points out that the Texas HMO program lapsed into law without Bush's signature.

McCain said he also would ensure that women and children are allowed to see specialists without prior approval by the HMO.

The senator wants to spend $2 billion in one year -- and up to $6 billion in total -- for a new prescription drug program for the elderly. The money would go to states that help buy drugs for senior citizens with incomes below 200 percent of the poverty level.

Senior citizens with income levels more than twice the poverty rate could get help with catastrophic drug expenses under a pilot project McCain wants to start.

He said he would pay for the program by cutting waste from the federal budget and eliminating special tax subsidies for special interests. The vague budget statement could open McCain to criticism from rivals.

The Arizona senator also proposes to:

• Dedicate 70 percent of federal budget surpluses to shoring up Medicare. "Democrats want to spend the surplus on bigger government. Republicans claim it all for tax cuts," he said. Bush would dedicate a large portion of the surplus to a $483 billion, five-year tax cut.

• Restrict "legal predators" that drive up health care rates with needless lawsuits. He would place limits on punitive damages.

• Lift restrictions on the ability of states to enroll children in an existing government-backed health insurance program.

• Add $2 billion to the veteran's health care network. McCain is a former Vietnam prisoner of war. Bush has promised to overhaul the system for veterans, but has provided no specifics.

"We must assure people the health care choice they deserve and the control they demand -- and we must contain costs to make care more accessible and affordable to all Americans," he said. "Getting there does not demand some grand experiment in social engineering, or a death-by-a-thousand-cuts gradual government take over of our health care."