Excuse me? What sort of crack is Pelosi smoking?
Bringing in the Federal government--a de jure, de facto monopoly in its own right--into the business of health insurance is supposed to create competition?
Private anything is unable to compete with the Federal government, with regard to the provision of services, for three fundamental reasons: one, the Federal government prints money, by way of the Federal Reserve System; two, the Federal government makes the law; and three, the Federal government has a monopoly on the force of armed power to enforce said law.
By getting the Federal government involved, Pelosi is not creating competition; she is destroying--nay, steamrolling--the competition. Furthermore, neither the agency (or agencies) that would be charged with administering the so-called "public option" nor their employees will have any incentive whatsoever to control costs, well, except through rationing of services provided (i.e., health care services), since after all, it's the Federal government. The Federal government, with its seemingly infinite supply of resources, backed by a claim on the lives, the labor, and the property of its citizens, enforced via taxation and confiscation, has no incentive whatsoever to provide quality services at a minimum cost...or services of any reasonable quality to begin with.
Clearly, Pelosi is either full of sh*t, believes her own lies, is drunk with power, or is all of the above.
The good stuff, I assume.