"I think (a public option) is an important tool to discipline insurance companies," Mr. Obama said.
Pressed on whether he would insist on a public plan in health care reform efforts, however, he said, "We have not drawn lines in the sand other than reform has to control costs and has to provide relief to people who don't have health insurance or are under-insured."
The president told reporters that the public plan should be included in the health insurance exchange -- the marketplace of consumer options – that Congress' health reform package is expected to establish.
"For us to be able to say, here's a public option that's not profit-driven, that can keep down administrative costs and provide you with good quality care, I think that makes sense," he said.
Mr. Obama noted the strong public support for the public option documented in recent polls.
He also pushed back against the claim, most recently expressed by health insurance industry groups in a letter sent to Congress today, that a public option will drive out private competitors and ultimately leave consumers with fewer choices.
"Why would it drive insurance out of business?" the president asked. "If private insurers say the marketplace provides the best quality health care, why is it the government, which they say can't run anything, suddenly is going to run them out of business? That's not logical."
Mr. Obama said that while the underlying premise of a public option makes sense, he understood concerns about whether the plan would be heavily subsidized. "I think that there is a legitimate concern if the public plan was simply eating off the taxpayer trough that it would be hard for private insurers to compete," he said.
Still, he said that if the public plan proved able to lower costs for consumers by reducing administrative costs, private companies should ask whether they could do the same.
"That's good for everybody in the system, and I don't think there should be any objection to that," he said.
Mr. Obama said he is optimistic about the progress Congress has made developing a health care reform package.
"This is obviously a complicated issue, but I am very optimistic," Mr. Obama said. "There is no doubt that we must preserve what is best about our health care system, and that means allowing Americans who like their doctors and their health care plans to keep them. But unless we fix what is broken in our current system, everyone's health care will be in jeopardy."
He also repeated his assertion that the legislation will be deficit-neutral over the next decade and that it will bring down the cost of health care. The White House and Congress have already revealed some plans for bringing down costs, such as an agreement with the pharmaceutical industry to cut the cost of prescription drugs for seniors.
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