Health Secretary Kathleen Sebelius said the president doesn’t want health care reform to kill off the private health insurance system, but rather buoy it with more competition.

Kathleen Sebelius

“The president does not want to dismantle privately-owned plans,” Sebelius said on CNN’s “State of the Union with John King.” “He doesn’t want the 180 million people who have employer coverage to lose that coverage. He wants to strengthen the marketplace.”

The insurance industry has argued repeatedly that providing people with a government-funded health insurance option will discourage them from continuing private-pay coverage.

“The president feels that having a public option side by side, same playing field, same rules, will give Americans choice and will help lower costs for everybody,” Sebelius told King. “And that’s a good thing.”

Speaking on ABC’s “This Week with George Stephanopoulos,” Sebelius said President Barack Obama remains “very serious about having health reform this year and having it paid for.”

She added that the president does not want to increase the budget to pay for health care reform, but at the same time saying “doing nothing has a huge cost.

“It’s crushing businesses, it’s crushing families. Our workers are less competitive. We can’t sustain the system that we have right now, so the status quo is not an acceptable alternative, and Congress knows that. The providers know it, the hospitals know it. That’s why people are at the table, working this year on health reform,” she told Stephanopoulos.

In her interview with King, Sebelius linked improving the nation’s economy to better health care. “We can’t fix the economy without fixing health care,” she said.

Sebelius noted differences from when the Clinton Administration attempted health care reform in the early 1990s, saying doctors “understand the current system doesn’t work” and that “insurance companies are saying they are willing to change, they’re willing to talk about this.”

“That’s a very different dynamic than even in the Clinton era, when those same folks were pushed away, saying the status quo is acceptable,” said the former Kansas insurance commissioner and former president of the National Association of Insurance Commissioners.

She argued that private insurers have no competition in some states, including her home state of Kansas. “There is a dominant insurance company in a lot of the states,” Sebelius said.

“So, we created a public option for state employees, so they could choose side by side benefits and prices. Competition is good. You can write the rules for a level playing field.”

Sebelius said the president continues, as he did during his campaign for the presidency, to feel that parents need to purchase health insurance. “The individual mandate should fall on parents,” she said.

Stronger encouragement to buy insurance should help with getting more of the 46 million who are uninsured to find coverage, she said. “I think having everybody step up to the plate, having employers encouraged to come into the system, individuals certainly come into the system, and the government play its role, I think, then we can fully cover all Americans and lower costs for everybody,” she said.