Nearly everyone knows what's wrong with the health care system in the United States. It costs more money than in virtually any other developed nation, yet covers on the average fewer people. Expenses have soared at an astronomical rate and millions of Americans have been priced right out of health care, lacking even basic insurance.

What they don't always know is what to do about the situation. That's because there is no single solution to this increasingly difficult problem. It will have to be attacked on many fronts.One potentially promising attck is being pushed by Sen. Orrin Hatch, R-Utah, who is sponsoring a measure designed to reduce "defensive medicine" - the often unnecessary and usually expensive testing, procedures and consultations done by doctors to protect themselves against possible malpractice lawsuits.

The senator says the medical methods arising from doctors' fear of malpractice claims have inflated the nation's yearly health-care costs by 25 percent. That would be equal to a staggering $150 billion in 1989.

Hatch's bill would authorize $200 million a year to encourage states to develop ways to resolve medical malpractice disputes without going to court. The bill also would cap punitive damages at $250,000, limit attorney fees, and allow periodic instead of lump-sum payments for awards exceeding $100,000.

Trial lawyers are opposed to the plan. Though they couch their opposition in terms of concern for plaintiffs, they have a vested financial

interest in seeing expensive malpractice suits continue to increase.

An average of 900 malpractice lawsuits are filed each day in the United States, and in cases that plaintiffs win, the average award is in excess of $300,000. Multimillion-dollar awards, once rare, are now common.

Arbitration seems to make more sense than litigation; it takes less time and is less costly. Arbitration has been adopted as an option in Michigan. In Canada, malpractice cases are heard by a judge instead of a jury, reducing the melodramatic appeals lawyers often use on jurors.

Canada also caps punitive damages at $200,000, which are rarely awarded in any case. As result, Canadian doctors practice less of the expensive "defensive medicine" and Canadian malpractice insurance costs only one-ninth of that in the United States.

Arbitration and caps on punitive damages aren't the only answers to the soaring cost of health care, but they are a good place to begin.