I've learned not to trust my first guess about where you're going, Frank, and this is one of the cases where your subject line suggested a hardline position while your text was eminently reasonable.
It's clear that the prohibition of competing private insurances is meant to prevent those other plans from sucking away resources and support. I can understand why that would seem draconian and obnoxious to Conservatives like Tom (it makes me uneasy too), yet for the practical reasons you give, it seems necessary. That the provision may yet torpedo the California plan worries me a little, but it's often the case that courts will rule selectively and surgically that only one part of a law is unConstitutional or otherwise invalid, and leave the rest standing. The system could probably still make it with some competition, although it might take longer to put it on a (fairly) sound financial basis.
As for the ultrarich, they don't need health insurance anyway and simply self-insure. Who needs Blue Cross when you can buy a hospital?
Excellent turn o'phrase:
I consider selective health care to be managed mortality and not managed care.
We've taken for granted this regime of business-provided health care, but at this late date it's starting to look more like one component in a system of human husbandry. Businesses make cold-blooded decisions about their "stock", including humans, and will manage healthcare expenditures only to maximize productivity, not with any concern for the quality of life of their workers. This isn't necessarily inappropriate behavior for business; rather, I'm saying that giving business a responsibility it shouldn't necessarily have has produced appalling results. If you want a society-wide improvement, you don't give the responsibility to people whom free-market theory teaches to tend only to their own local affairs. National health care seems like the quintessential example of a problem that governments are intended to address.