Obama defends public health option

President Obama defended his push for a new public health insurance plan Tuesday, just as key senators were considering leaving it out of their health reform bill.

Obama, speaking at a town-hall meeting sponsored by the AARP, said that it makes sense to have a public option to compete with private plans in order to keep down healthcare costs. Obama acknowledged controversy over more government-run insurance, but he said that many of the complaints have been stoked by myths.

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"A lot of people have heard this phrase 'socialized medicine,' and say we don't want government healthcare, we don't want a Canadian-style plan," Obama said. "Nobody's talking about that."

The president said he got a letter from one woman who said she doesn't want "socialized medicine" and doesn't want her Medicare coverage changed.

"I wanted to say, 'That's what Medicare is, it's a government-run healthcare plan that people are very happy with,' " Obama said. "I think we've been so accustomed to hearing those phrases that sometimes you can't sort out the myths from the reality."

Members of the Senate Finance Committee are considering a healthcare reform bill that would leave out a public insurance plan. Versions of reform bills being considered by the House and reported out of the Senate Health, Education, Labor and Pensions Committee include a public plan.

The measure being considered by a group of senior Democrats and Republicans on the Senate Finance panel would create a nonprofit cooperative that would offer plans to compete with private insurance. Sen. Olympia Snowe (R-Maine) told The Associated Press on Monday that the cooperative approach is the preferred path for the bipartisan group on the Finance Committee.