The Institute for America’s Future has released another report about the role of a public health insurance plan in reducing health care costs and improving care quality. During the presidential election, all of the major Democratic candidates proposed some kind of public plan that would directly compete with private insurers within a new health insurance exchange.

Their theory was this: Insurer and hospital markets are increasingly dominated by large insurers and provider systems. These private insurers do not use their market power to “drive hard bargains with providers” and have no need to bargain with providers. A public plan would bring competition back to the health insurance business and force private insurers and hospitals to adopt the highest efficiency standards.

In other words, allowing patients the choice of a private plan or a public plan would re-invigorate the very same kind of free market principles of competition that conservatives traditionally champion. Private and public plans would have to deliver the highest quality at the lowest possible cost to attract patients, while the public plan will have the resources, market power, and incentive to “reshape the market practices to promote quality and cost effectiveness.”

This approach would not only bring us closer to universal coverage but it will also put us on the road towards a more efficient health care system (read: lower health care costs and premiums). But the idea isn’t very popular with the insurers. At last week’s Health Action Conference, Families USA President Ron Pollack suggested that health insurance companies are not willing to accept the pay cut that will come with the increased competition and that a public plan option (and how we pay for it) could become a sticking point in the health care debate.

In fact, some may establish a false dialectic that pits reformers/Democrats against the business community and insurers. But insurers or trade associations are not the voice of the business community (there is no monolithic business position). Many smaller firms, who are buckling under high insurance costs, believe that a public health plan would lower their health care costs . It will be important for progressives to highlight their voices in the larger health debate.

“Anxious over the ballooning size of the proposed economic stimulus package,” Sen. Ben Nelson (D-NE) and Sen. Susan Collins (R-ME) have banded together to identify spending that they believe should be cut. But the below health provisions (all rumored to be on the chopping block) would create health care jobs, allow research facilities to hire more researchers, and lay the foundation for future economic growth.

As Dean Waldman has suggested, “Health is infrastructure. Health care is the maintenance and repair service for this key element of our productive capacity. As a nation we need to treat the health of our people just like repaving a road – as an investment in our future.”

Ezra Klein is asking: “How much do Republicans fear the Obama administration’s coming health reform campaign today? How much did they fear it a week ago?”:

To put it slightly differently: A lot of the Republican strategy will be predicated on whether they think, from the outset, that they can kill health reform and hand Obama a failure on the very issue that he said voters should use to “judge my first term as president.” If they think they can, they will.

I tend to think that a lot of this is in the hands of the Democrats. With or without Daschle — and admittedly, it would have been easier with Daschle — proponents of reform have the wind at their backs: the President believes that health reform is key priority and Congressional leaders are ready to act. The economic crisis not only provides the opportunity for large-scale reform but, fiscally speaking, it demands it. And if the Democrats rally around a single message and clearly articulate the need for reform, public support for change, which is already at record highs, will only grow and Republican obstructionism will be seen for what it is.

So, the whole conversation about the consequences of Daschle stepping down is a bit misguided. I think the real question is: are the Democrats still willing to invest political capital in health reform in the wake of Daschle’s departure? Of course it will be “harder,” but that’s what politics is all about.