Refusing to define it as a make-or-break part of his health reform efforts, President Barack Obama called a possible government-run insurance program “an important tool to discipline insurance companies.”

Barack Obama

The president’s remarks, made today (June 23) during a press conference, come as two of the health insurance industry’s biggest forces urged against such a public plan.

In a letter to senators working on health care reform, America’s Health Insurance Plans and the Blue Cross Blue Shield Association said a government-run plan would “dismantle employer-based coverage, significantly increase costs for those who remain in private coverage and add additional liabilities to the federal budget,” according to a copy of the letter.

Obama reiterated a stance made dating back to his campaign for the White House that the status quo for health insurance is “unacceptable” and his top priority is controlling costs to aid the economy, U.S. families and businesses of all sizes.

Through a health insurance exchange or marketplace, he said, consumers can keep the current insurance they have, but also compare plans in an effort to be conscious of how their health care dollar is used.

Calling the government-run plan “one option” in that marketplace, Obama said “it makes sense.”

“Why would this drive the private insurance industry out of business? If they [private insurance companies] say what the marketplace claims, that they are [helping customers] and providing a good deal …why would the government, who they say can’t run anything, drive them out of business?” the president asked reporters.

He did acknowledge “legitimate concerns” by private insurance companies, including competition against the same entity that makes the rules, adding that the structure of such a plan is in the planning stages.

“Saying you can’t compete with the government as one option [for health insurance] defies logic,” Obama said.

As for whether employers would jump ship for a public plan that could be cheaper than private options, Obama implied that competition could breed changes among insurance companies.

“If the public plan redirects administrative costs, [private insurers] are likely to take note and say if the public plan can do this, why can’t we?” he inquired.

When pressed as to whether a public plan was non-negotiable for any bill bearing his signature, Obama again referred to the early nature of health care reform efforts.

“We are not drawing lines other in the sand other than saying reform has to control costs and provide relief to those without insurance or the underinsured,” he said. “I think the public plan makes sense.”