Senate Minority Leader Mitch McConnell of Kentucky Sunday called the idea a "nonstarter."
Today Obama pushed back hard at his critics.
"When you hear the naysayers claim that I'm trying to bring about government-run health care, know this. They are not telling the truth," he said. "What I am trying to do, and what a public option will help do, is put affordable health care within reach for millions of Americans."
Obama pitched this idea to a skeptical audience -- the AMA has expressed its concerns with the public option.
"That doesn't mean we oppose," AMA president Nancy Nielsen said. "It means we would like to talk about perhaps other options."
Health and Human Services Secretary Kathleen Sebelius said Sunday that the administration remains committed to a public option.
"That's a direction he thinks will be beneficial for the public and for -- to make sure that costs go down. And that's a central belief of his. This has to lower costs for everyone," Sebelius said on ABC's "This Week With George Stephanopoulos." "In lots of places in the country, absent a public option, absent some kind of competitive option, people would have no choice."
Today, Obama emphasized that these changes would not affect all Americans. If you are happy with your health care, you will get to keep it.
"My view is that health care reform should be guided by a simple principle: Fix what's broken and build on what works," he said.
Obama argued that the nation's health care system equates expensive care with better care, and too much money is being spent on treatments that do not actually make Americans healthier.
To fix that system, and allow doctors to be "healers" and not "bean-counters and paper-pushers," Obama said there need to be changes to how doctors are compensated and how they are informed of new medical information and innovations.
In his May 11 meeting with leaders of the health care industry, AMA's incoming president Dr. James Rohack told Obama that one of the reasons health care costs are so high is because doctors order unnecessary tests, referrals and hospital stays because they're practicing "defensive medicine" and fearing malpractice lawsuits.
"What we asked the president is that if we, as physicians, are willing to tackle the issue of looking at variation of care and reducing unnecessary tests, we also have to have protection in the courtroom," Rohack told ABC News after the meeting, that "if we didn't order a test, that we subsequently aren't going to get sued because we didn't order that test that shouldn't have been done in the first place."
So, for example, not everyone who comes into the emergency room complaining about a headache would automatically get an MRI, Rohack said.
Obama said today he is open to considering ideas on how to ensure patient safety but allow doctors to practice medicine. "That's how we can scale back the excessive defensive medicine reinforcing our current system of more treatment rather than better care," he said.
Obama is the first president to address the AMA since Ronald Reagan in 1983. The AMA opposed the ambitious health care plan that former President Bill Clinton attempted in 1994, but the doctors group wants a seat at the table this time, recognizing that some kind of change is inevitable.