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One of the biggest concerns with having a public option is the possibility that the sickest people will wind up on it, while the healthiest will be in private insurance. The House plan does what it can to make sure this doesn't happen: companies can't refuse to take people because of their medical history, and they can't rescind policies because of medical history.
But that still leaves a simple way to reduce the amount of money you have to pay out as an insurer. Deny care when you can. Drag your feet when you can't. Make it hard for sick people to get the money they need.
This sort of behavior is already common amongst insurers, and it's very hard to fight.
So what happens if there's a public option which doesn't engage in this type of behavior? People sign up, on the exchanges, for private plans. When they get sick, the insurance company starts giving them the runaround. Pretty soon they get sick of it, and they cancel that plan and go on the public plan, which they know won't give them the runaround.
Voila! Mission accomplished. Sick, expensive person, now that they cost more than they bring in, shifted from private plan to public plan!
Anyone who thinks that private insurers won't do this systematically if they think they can get away with it hasn't been paying attention. And odds are pretty high they'll think they can get away with it.
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