Insurance, at its core, is based on communism. It is a collective in which each participant pays the same amount and those who need it are helped. The "lucky" participants are those who pay more than they get back, they are healthy(health insurance) and alive(life insurance). There is very little social rationale for health insurance companies to be for-profit, and for non-mutual life insurance companies. These companies' business models inherently contradict the collective rationale for actually having insurance, since they want to deny coverage for those who need it (or risk needing it in the future). Insurance companies as businesses are not failures except that their progress and success directly contradicts our societal goals of a healthy populous. It therefore becomes obvious that we need to extend this basic government services to the most vulnerable segments of society, since it is under provided by the free market.
This is not dissimilar to the extra USF charges we see on our phone bills. Those charges help pay for the rural and thus unprofitable segments of our society to have basic phone service. Phone companies would never pay $100K to extend a phone like 4 miles up a road to 1 person who would pay them $30/month, but they are required to by law, and thus we subsidize. Perhaps the solution is not a public option, but an option that does not allow for denial of coverage, that is subsidized by a small tax on everyone else. Of course, that is exactly what insurance is, everyone who’s healthy and alive subsidizing those who aren’t, so why do we need these companies at all?
To implement this, we need federal regulation with states out of the picture. 1) Competition will increase because not every insurance company is in every state. 2) Maximum premiums will be regulated, to make sure everyone can afford the insurance. 3) High risk individuals, which insurance companies would deem “unprofitable” and would likely not have insured, will be subsidized by the government to the point that the actuarial assumptions used by these companies would render them profitable to take on as customers as well.
We will not need a "new" government run health plan for the uninsured and uninsurable (a new medicare), but we'll have a regulated, outsourced, and subsidized healthcare plan, which will increase competition among insurers but also increase the pie for them to make money.
And if some people still choose not to have a phone line in their house, that’s their own damn problem.
PS - I plan on editing this numerous times before its perfect.... then maybe a NYT editorial submission...