Healthcare economist Len Nichols scared me a bit here with this line:

A public health insurance plan would reassure those who mistrust private insurance that their insurance product is accountable to elected officials and not to corporate stockholders or the proverbial bottom line.

The accountability of public officials doesn’t impress me much, but Nichols got me back with:

At the same time, the public health insurance plan must not be allowed to bankrupt private insurers unfairly nor should it be permitted to pave the way for governmental control of the health system.

and lost me again with:

The following three conditions are absolutely necessary for public and private health plans to compete fairly:

• All insurance market rules must apply to all plans equally.
• The authority governing the insurance marketplace cannot also manage the public health insurance plan.
• The public health insurance plan cannot leverage Medicare or other public insurance products to administer prices or claim an unfair advantage.

because there is no way these necessary conditions will ever occur, as Bruce Josten testified a public health insurance plan would:

put the government in the position of being both a team owner and the referee; inevitably the government would move to give unfair advantages to the "public option," just as they are considering doing now with the public financing of student loans.

or to put it in the words of the Washington Post:

It is difficult to imagine a truly level playing field that would simultaneously produce benefits from a government-run system...Medicare keeps costs under control in part because of its 800-pound-gorilla capacity to dictate prices -- in effect, to force the private sector to subsidize it. Such power, if exercised in a public health option, eventually would produce a single-payer system; if that's where the country wants to go, it should do so explicitly, not by default.