The Public Option is taking a lot of heat in the current health care debate in the Congress….of course many are saying that the insurance companies could not compete with the option and that they would lose all their money if the public option is adopted.

On the BNET Healthcare website I found the following suggestion:

So how would the private health plans compete with the government-backed plan? “Offering a public health insurance plan as an alternative choice should be a catalyst for private plans to innovate in the way they operate and pay for care,” the report states. “It would help them reduce their administrative costs and implement payment and system reforms that lead to more appropriate utilization, better care, and slower cost growth—and, in the process, contribute to reduced premiums.”

The authors suggest that “community health plans” that partner with integrated delivery systems would be in a good position to reduce costs through joint preventive and chronic care programs. But even if truly integrated hospital-and-doctor systems were more widespread than they are, health systems and health plans have not had a good track record of working together when they’re not fighting over rates.

The Commonwealth Fund has another bright idea: “Private plans could also be given the authority to adopt public plan payment methods and rates.” Whoa! If that means what I think it does, the government and private plans would jointly decide what they wanted to pay providers. I don’t think that idea would go down very well among hospitals and physicians — although in the long run, we may have no other choice.

Finally, the report predicts that if private plans adopted effective cost-control measures “sufficient to slow a rise in their premiums relative to trends in public plan premiums,” the private and public plans would be charging about the same within five years.

If these other “options” were considered then could the insurance industry truly compete with the proposed public option?  If so, then argument that the insurance company is spending $1.4 million a day trying to defeat would be a waste of money, IMO.