Kip Sullivan wrote about this plan in Labor Notes.

If Barack Obama wins the fall election, he will be under more pressure to establish universal health insurance than any president in U.S. history. This will be due not only to public disgust with the current health care system, but to the hard work of organizations dedicated to universal health insurance.

But the most powerful of these groups, including the AFL-CIO and Service Employees (the major Change to Win health care union) are promoting a solution that won’t fix the problem.

Their plan would fatten the insurance industry and make it an even more formidable opponent of true reform than it already is.

If SEIU and the AFL-CIO get their way, the day that all Americans have affordable insurance will be pushed into the unforeseeable future.

The labor-backed plan, which they call “guaranteed affordable choice,” would create a public program like Medicare that would allegedly compete with the nation’s 1,500 insurance companies. Americans would get tax-financed subsidies to purchase insurance from either a private insurance company or the public plan. Competition, which has never worked in the health insurance industry, would magically come to life.

By leaving the bloated insurance industry smack in the middle of our health care system, “guaranteed affordable choice” would have taxpayers and premium-payers continuing to spend hundreds of billions of dollars on unnecessary administrative costs.