The Congressional Progressive Caucus calls for a robust public option that must:

Enact concurrently with other significant expansions of coverage and must not be conditioned on private industry actions.
Consist of one entity, operated by the federal government, which sets policies and bears the risk for paying medical claims to keep administrative costs low and provide a higher standard of care.
Be available to all individuals and employers across the nation without limitation
Allow patients to have access to their choice of doctors and other providers that meet defined participation standards, similar to the traditional Medicare model, promote the medical home model, and eliminate lifetime caps on benefits.
Have the ability to structure the provider rates to promote quality care, primary care, prevention, chronic care management, and good public health.
Utilize the existing infrastructure of successful public programs like Medicare in order to maintain transparency and consumer protections for administering processes including payment systems, claims and appeals.
Establish or negotiate rates with pharmaceutical companies, durable medical equipment providers, and other providers to achieve the lowest prices for consumers.
Receive a level of subsidy and support that is no less than that received by private plans.
Ensure premiums must be priced at the lowest levels possible, not tied to the rates of private insurance plans. (emphasis mine)

Len Nichols, the director of health policy at the New America Foundation and the co-author of a proposal to level the field through governance and pricing regulations, said that state employee health plans are “proof of concept” that governments can maintain fair competition. “They do not unleash this impulse to take over the world,” Mr. Nichols said. “I don’t see this leviathan behavior.”

But critics argue that with low administrative costs and no need to produce profits, a public plan will start with an unfair pricing advantage. They say that if a public plan is allowed to pay doctors and hospitals at levels comparable to Medicare’s, which are substantially below commercial insurance rates, it could set premiums so low it would quickly consume the market.

Senator Charles E. Grassley of Iowa, the senior Republican on the Finance Committee, recalled how Mr. Obama made a personal pledge of bipartisanship when he and Senator Max Baucus of Montana, the committee’s Democratic chairman, joined the president for a private lunch at the White House last month.

“I said, ‘Yeah, it’s a problem,’ ” Mr. Grassley said of the public plan, “and he said something along the lines of, ‘If I get 85 percent of what I want with a bipartisan vote, or 100 percent with 51 votes, all Democrat, I’d rather have it be bipartisan.’ ” [...]

Senator Ron Wyden, an Oregon Democrat who is a longtime proponent of revamping health care, said Mr. Obama seemed to be wrestling with how far he could push Congress.

“The president is very much aware that to bring about enduring change — health care reform that lasts, gets implemented, wins the support of the American people and does not get repealed in a couple of years — you need bipartisan support,” said Mr. Wyden, who was among two dozen Senate Democrats who met with Mr. Obama about health care last week. “So he’s grappling with, how do you do that?”