The term "public option" is usually referring to a program like Medicare involving government-funded insurance with minimal standards of coverage. The standards of coverage in the public option will likely be superior to existing health insurance plans by eliminating various restrictions (e.g., preexisting conditions, lifetime maximums, reduced caps on coinsurance) and may be at lower cost. This will yield competition that may yield improvements on the quality of private plans and control costs. But various proposals also limit eligibility for the public option, constraining choice and thus limiting competitive pressures on private insurers. There's also a fear that a viable public option might be so attractive and so much lower in cost because of a taxpayer backstop on cost overruns (e.g., pricing premiums below actual cost) that it will decimate the health insurance industry who might not be able to compete. That might then lead to a single payer system.