I agree this should be done regardless of whether there's a public option or not. In an indirect way, the public option does this as it isn't easy to sue to government.
I have a little more time for a thoughtful reply, now.
I think we all agree that we cannot get along without a central government. I still feel the Constitution had it right when it vested the limited powers to that government...both in scope and in kind (matters affecting all states, such as defense, interstate commerce, etc.).
But (and I say this from years of experience) the inefficiency of a bureaucracy is directly related to the size of the bureaucracy. The U.S. government is by its very nature very inefficient and costly. That's the prinicple reason that a public healthcare insurance option is a bad one. And as I alluded to earlier, not-for-profit insurance companies can do a tremendously good job, providing there is competition. I sort of fibbed earlier, Blue Cross/Blue Shield is not a non-profit. It's allowed 1/2 of one percent of profit (which goes to useful/innovative things). So then why does the cost of insurers like BCBS keep skyrocketing? Malpractice insurance costs are passed along to them. Increased pharmaceutical costs, state-of-the-art medical equipment, and many other healthcare related items are passed along. Some of these items can be cost-controlled. Some cannot, unless indirectly through true competition. But tort reform takes care of a huge chunk of the cost of malpractice insurance.
Regulatory oversight is an important function of government. THAT's what they should be about with healthcare...not running it. To keep this post sort of on topic...I believe the same should be true of the education system. Schools should be privately run, monitored by the community and regulated by the states.
One more thing, regulatory commissions, when staffed appropriately using community members (not a bunch of lobbyists and politicians), can pay huge dividends in minimizing waste and fraud. But this issue alone is worth a 50 page discussion thread.