American’s private health insurance industry threatened Americans with dire consequences if they have to face genuine competition from a public health plan option. In his press conference, Obama called their claims nonsense.

In a letter to Congress, the American Health Insurance Plans (AHIP) and Blue Cross/Blue Shield warned (AP reporting):

"We do not believe that it is possible to create a government plan that could operate on a level playing field," said the insurers’ letter, signed by AHIP head Karen Ignagni and Scott Serota, the Blue Cross chief executive. " Regardless of how it is initially structured, a government plan would use its built-in advantages to take over the health insurance market.". . .

"A government-run plan no matter how it is initially structured would dismantle employer-based coverage, significantly increase costs for those who remain in private coverage, and add additional liabilities to the federal budget," said the letter.

Here’s Obama today defending the public plan: (via Ezra Klein)

OBAMA: Now, the public plan, I think, is an important tool to discipline insurance companies. What we’ve said is, under our proposal, let’s have a system, the same way that federal employees do, same way that members of Congress do, where we call it an exchange, but you can call it a marketplace, where, essentially, you’ve got a whole bunch of different plans….As one of those options, for us to be able to say, here’s a public option that’s not profit-driven, that can keep down administrative costs, and that provides you good, quality care for a reasonable price as one of the options for you to choose, I think that makes sense.

QUESTION: Wouldn’t that drive private insurance out of business?

OBAMA: Why would it drive private insurance out of business? If private insurers say that the marketplace provides the best quality health care; if they tell us that they’re offering a good deal, then why is it that the government, which they say can’t run anything, suddenly is going to drive them out of business? That’s not logical.

Now, the — I think that there’s going to be some healthy debates in Congress about the shape that this takes. I think there can be some legitimate concerns on the part of private insurers that if any public plan is simply being subsidized by taxpayers endlessly that over time they can’t compete with the government just printing money, so there are going to be some I think legitimate debates to be had about how this private plan takes shape.

But just conceptually, the notion that all these insurance companies who say they’re giving consumers the best possible deal, if they can’t compete against a public plan as one option, with consumers making the decision what’s the best deal, that defies logic, which is why I think you’ve seen in the polling data overwhelming support for a public plan.

This is a good fight, and it’s one we can we win. Join the battle here.

About the video: In her testimony before Congress, Robin Beaton, a victim of America’s private insurers, delivered a powerful indictment of the industry that now seeks to be shielded from effective competition. Media Matters has more on her story and the media coverage.