"To my progressive friends, I would remind you that for decades, the driving idea behind reform has been to end insurance company abuses and make coverage affordable for those without it," he said. "The public option is only a means to that end -- and we should remain open to other ideas that accomplish our ultimate goal.
"And to my Republican friends," he added, "I say that rather than making wild claims about a government takeover of health care, we should work together to address any legitimate concerns you may have."
Near the end of the speech, Obama shared a letter by the late Sen. Ted Kennedy, D-Mass., that he received a few days ago but which was written in May when Kennedy learned his illness was terminal.
With Kennedy's widow, Victoria, and his children, Ted Jr., Patrick and Kara watching from the speaker's box in the House gallery, Obama said that in the letter Kennedy expressed confidence that Congress this year would pass health care reform legislation, calling it "that great unfinished business of our society."
"For some of Ted Kennedy's critics, his brand of liberalism represented an affront to American liberty. In their mind, his passion for universal health care was nothing more than a passion for big government," Obama said. "But those of us who knew Teddy and worked with him here -- people of both parties -- know that what drove him was something more. On issues like these, Ted Kennedy's passion was born not of some rigid ideology, but of his own experience."
Obama pledged again not to sign any legislation that adds to the federal deficit, a line that won him a bipartisan standing ovation.
"Our health care problem is our deficit problem. Nothing else even comes close," he said.
Obama spoke directly to the nation's senior citizens to assuage concerns about Medicare dollars being used to pay for health care reform and pledged that would not happen.
"[N]ot a dollar of the Medicare trust fund will be used to pay for this plan," he said. "The only thing this plan would eliminate is the hundreds of billions of dollars in waste and fraud, as well as unwarranted subsidies in Medicare that go to insurance companies -- subsidies that do everything to pad their profits and nothing to improve your care."
Obama said his plan incorporates ideas from both Democrats and Republicans, including one advanced by his rival in last year's general election, Sen. John McCain, R-Ariz. He said he now backs McCain's pitch to provide low-cost coverage to Americans who cannot get insurance because of a pre-existing condition.
"This was a good idea when Sen. John McCain proposed it in the campaign, it's a good idea now, and we should embrace it," the president said.
Obama pledged to continue to work towards bipartisanship and common ground.
"If you come to me with a serious set of proposals, I will be there to listen. My door is always open," the president said.
But Obama issued a warning to those who he said do not have an interest in working toward real reform.
"I will not waste time with those who have made the calculation that it's better politics to kill this plan than improve it," he said. "If you misrepresent what's in the plan, we will call you out. And I will not accept the status quo as a solution. Not this time. Not now."