President Obama believes the cost of inaction on health finance would be far greater than the cost of reform efforts, the president’s spokesman said Tuesday.

Health reform came up during a White House press briefing.

Obama campaigned for health reform Monday, during a speech at the annual meeting of the American Medical Association, Chicago.

At the White House press briefing, a reporter asked about a Congressional Budget Office forecast suggesting that a health reform proposal unveiled by Sen. Edward Kennedy, D-Mass., and his colleagues would cost $1 trillion.

“I think what’s important is what the president outlined yesterday, in his speech to the doctors, that we know clearly what the cost of inaction is,” White House Press Secretary Robert Gibbs said, according to a briefing transcript. “We know what that cost is to the federal budget; we know what it is to state budgets; we know what it is to budgets of families and to businesses, large and small. And that inaction is something we simply can’t afford.

The version of the Kennedy proposal that the CBO analyzed is an older, incomplete version, Gibbs said.

“I don’t think [it] is indicative of where we are now,” Gibbs said.

Gibbs added that Obama has come up with $950 billion in budget savings that could be used to keep health reform neutral.

Gibbs also rejected suggestions that a new public health insurance program would drive out commercial group coverage.

“I guess I wouldn’t necessarily subscribe to this notion that presenting a public option with better choice and more competition will result dramatically in employers dropping what they already have,” Gibbs said. “The notion of injecting a public option, we believe, will do exactly what I said in terms of choice and competition. Having somebody ensure that there is an affordable placeholder in the market I think will have a dramatic effect in terms of driving down costs, exactly what the president talks about each and every time he talks about health care reform.”

Creating a public program that would expand coverage access and drive down costs by increasing competition is “an important option that has to be preserved in this entire debate,” Gibbs said. “The injection of competition will drive down costs…. Other insurance companies will follow that.”