"One of the options... should be a public insurance option," the president said, addressing one of the most contentious issues in the current health care debate. "The reason is not because we want a government takeover of health care."
He said a public option would keep private companies honest and would keep prices down.
"We've got to admit the free market has not worked perfectly when it comes to health care," Mr. Obama said.
He rebuked conservative attacks that the introduction of a public plan would lead to a government "monopoly" of health care.
"Don't let people scare you," he said. "If you're happy with your plan, you keep it."
He emphasized that the next eight weeks of debate in Washington will be critical.
"If we don't get it done this year, we're probably not going to get it done," he said.
The president, however, acknowledged that his plan "comes at a time where we don't have extra to spend. Tax revenues are down, more people are seeking help from the state, so we've got a lot of pressure on our budget."
He repeated his administration's promise to keep the reform package budget-neutral over the next ten years through reduced Medicare payments, bringing down fraud and other means of reform. He also repeated his proposal for limiting tax deductions for the rich back to rates in place during the Reagan administration.
Reforming the current system, however, is "central to our economic future, and central to the long term prosperity of this nation," he said.
The United States has the most expensive health care system in the world but is not any healthier for it, the president said. Spending on health care across the country has continued to increase, though more so in some areas than others. Green Bay has a relatively cost-efficient health care system.
"We have reached a point where doing nothing about the cost of health care is no longer an option," Mr. Obama said. "The status quo is unsustainable."
High costs have crippled families, small businesses, and corporate giants like General Motors and Chrysler, he said, and has strained the federal budget as well.
"So if you're worried about spending and you're worried about deficits, you need to be worried about the cost of health care," Mr. Obama said.
Besides reducing costs for the currently insured, the president said there is a "moral imperative and an economic imperative" to provide options for the uninsured.
"When someone without health insurance is forced to get treatment at the ER, all of us end up paying for it," he said.
Watch President Obama's Remarks In Green Bay, Wis.
More CBSNews.com Coverage Of Health Care Today:
Health Care Reform Enters Critical Phase - A Look At The Status Of The Health Care Debate In Washington
House Leaders Duel Over Health Care - Pelosi, Boehner Draw Lines In The Sand Over A Public Plan