Another popular misconception. It is not that the firms involved would NOT compete, they are not even ALLOWED to suit up and get out on the field.
There is no trouble finding competition for practically any other type of insurnce, but the barriers and mandates are set so high for health insurance companies, they have little incentive to compete.
As others have suggested, eliminating these artificial restrictions about not selling policies across state lines, but insisting that the pool be contained only to within one locality or other limitations to membership, ends the likelihood of much serious competition ever being encouraged.
The “public option” will do absolutely ZILCH for fostering any competition, it would act muchmore like a bulldozer, in just demolishing any existing commercial structure.
“Public Option” is just a giant HMO.
If Americans currently hate their HMO I bet that will be nothing compared to how much Americans will hate their government run HMO if Obamacare passes.