In the WSJ:

The Obama-Baucus solution to this slow-motion catastrophe is to add tens of millions more people to the federal balance sheet. Because the public option will enjoy taxpayer sponsorship, it will offer generous packages to consumers that no private company could ever afford or justify. And because federal officials will run not only the new plan but also the "market" in which it "competes" with private programs -- like playing both umpire and one of the teams on the field -- they will crowd out private alternatives and gradually assume a health-care monopoly.

Well, yes, the public insurance would compete in the market, not "compete" in the "market."

One of the major reasons a publicly run insurance payer would be more cheaply is simply because it would tend to cover more people. The reasoning here is the same as in the debate over the mandate.

Should healthcare be subsidized in this way? Perhaps not if there are other private, non-profit insurance agencies. There are arguments for subsizing healthcare, such as correcting the labor market externality or to contribute to the positive externality that your community benefits when you are healthy. If any insurance company answers to stockholders before their patients (ahem, "customers,") it would be reasonable to deny them subsidy. But even if private, non-profit insurance agencies were to receive the same subsidy, I'm still not sure they would be able to offer to cover people as cheaply as the public option.

And in the end, it is the feeling of this nameless WSJ journalist that this is a potential downside, that an option be created that gives people healthcare, more affordably, by choice. And that people might overwhelmingly take that choice.

Postscript:
The President-elect has responded to a petition sent by Transportation for America, an advocacy group for transportation alternatives. Most notable to me is:

Everyone benefits if we can leave our cars, walk, bicycle and access other transportation alternatives. I agree that we can stop wasteful spending and save Americans money, and as president, I will re- evaluate the transportation funding process to ensure that smart growth considerations are taken into account.