Two questions for supporters of the public option

The public option on health care seems to have reared its head again. The option is supported for overt and covert reasons. Some supporters argue that private insurance does not permit for enough competition. Therefore, instituting the public option will enhance such competition. Is there any example where increased public provision has increased the competitiveness in the private sector?

At the same time, supporters of the public option argue that health insurance companies have grown too large and are therefore unresponsive. Evidently, their argument would suggest that growing smaller and therefore more competitive would improve the market. Uwe Reinhardt, perhaps the foremost health economist in the country, argues that the market is a bit more complex. He suggests that when the hospital sector began to consolidate that their bargaining power with insurance companies began to increase and that smaller insurers cannot negotiate effective pricing. He argues for a government intervention which would mimic the Maryland system - where rates are negotiated jointly and then available to all insurers. Why haven't the supporters of the public option picked up on that idea?