Now that the House has passed a health care reform bill, the nation's gaze turns to the Senate. The public option, a government-sponsored health insurance plan that would be an alternative to private insurance, remains a flash point in the debate. It should not be.

Critics of the public option claim that it would drive private health insurers out of business because no private company can compete with the government. But that exaggerates the public option's role in the reform. It is important to remember that in most cases the public option would only be available for purchase by people who do not have private insurance through their employer.

Even then, the public option would be only one choice available through insurance exchanges. The exchanges would be markets in which private insurers would compete for business by offering to individuals policies that meet minimum coverage requirements set by the government. So, yes, in this limited market, the public option would compete with private insurers. The exchanges also would subsidize the purchase of insurance, whether public or private, by people with incomes between 150 percent and 400 percent of the federal poverty level.

But the Congressional Budget Office estimates that the public option actually could have higher premiums than private insurance because the government would probably be less aggressive in its management of utilization and would attract less healthy enrollees. In addition,

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the public plan would have to negotiate fees with providers just as private plans do, and premiums would have to cover costs. In the end, the CBO estimated that the public option might cover 6 million people.

In short, the threat of the public option to private insurers is overblown. Nevertheless, some senators have said that a bill that includes it is dead on arrival in their chamber. As a compromise, Sen. Harry Reid has proposed that states be able to opt out of the public option. But that could reduce its insurance pool to the point of irrelevance. Sen. Max Baucus has championed public co-ops as an alternative, but the CBO says their chances of surviving in most markets are dim.

If, as private health insurers claim, the public option is just the seed of a single-payer plan, it is the tiniest of acorns. By comparison, UnitedHealthcare by itself organizes care for 25 million Americans, and SelectHealth insures 410,000 Utahns, about a quarter of the commercial market in this state. It's hard to see the threat from a government plan with a mere 6 million insureds nationwide.