A public health insurance option (public insurance option or public option for short) is a proposed health insurance plan that would be offered by the U.S. federal government. It is present in America's Affordable Health Choices Act of 2009 (H.R. 3200) as a Qualified Health Benefit Plan. The federal government would create a health insurance plan financed entirely by premiums, to provide citizens not covered by employer or other state insurance plans an option for health insurance that would compete with private insurers. There are no subsidies set aside exclusively for a public health insurance plan in any of the bills currently before Congress. The plans stated in the Senate HLP Committee and H.R. 3200, the two that contain clauses establishing a public insurance option, require the repayment of "seed money" to the Treasury over a ten year period.

Supporters of a public plan, such as Washington Post columnist E.J. Dionne, argue that many places in the United States have monopolies in which one company, or a small set of companies, control the local market for health insurance. A government run plan would thus create new competition. Dionne has labeled a public option a "monopoly-buster". He has also stated those opposed to a government plan know public opinion is against them and are resisting it by trying to move discourse towards abstract and demagogic ground. He has referred to Sen. Grassley's calling government a "predator" as a "most revealing" example of this

Economist and New York Times columnist Paul Krugman has stated that local insurance monopolies exist in many of the smaller states represented by "balking" Democrats, and that those who oppose the idea of a public insurance plan on the grounds of defending private competition are in practice just defending lucrative local monopolies. He also stated that traditional ideas of beneficial market competition do not apply to the insurance industry given that insurers mainly compete by risk selection. He wrote, "The most successful companies are those that do the best job of denying coverage to those who need it most." Krugman also said in 2007 that whilst a single payer system would be the most efficient and cheapest solution, a public insurance option could get the country towards single payer as through competition it would drive the private insurers out of business.

In a public rally in Cincinnati, on September 7, 2009, President Barack Obama said: "I continue to believe that a public option within the basket of insurance choices would help improve quality and bring down costs."


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