Why Do Insurance Companies Hate America?

From an AP story on health care reform:

"The House bill includes a provision for the government to sell insurance in competition with private companies, a provision strenuously opposed by industry."

That's really the crux of the problem right there, isn't it? The insurance companies don't want Americans to be able to choose a government-funded option because they know it will prove all the fear-mongers wrong. When Americans have the option of a public system where every dollar put into it actually goes to health care, instead of shareholders' and executives' pockets, while still maintaining a healthy level of choice (certainly at least as good as the current "networks" most of us have to stay within), they'll want it. Then what will the insurance companies do?

Seriously, isn't the American system supposed to be about competition? They're not talking about forcing anyone to take government-funded insurance, just providing it as one option. What's wrong with letting the government in and letting us choose?