Government competition to private health insurance is "the preferred option" for the Obama administration as it pushes to overhaul U.S. health-care delivery, White House spokesman Robert Gibbs said Tuesday.

In his daily White House briefing for reporters, Gibbs sought to downplay recent media questions about the President's support for the so-called "public option," saying the administration's position's hasn't changed.

Obama believes a public health-insurance option would afford consumers more choice and introduce greater competition, but he remains open to alternatives that would achieve the same goal, his spokesman said. Gibbs questioned why news reports focused on similar comments Sunday by Health and Human Services Secretary Kathleen Sebelius, and he rejected the notion that the administration needs to clarify its stance.

"We don't think there's anything to clear up," said Gibbs.

Obama has made a health-care overhaul a signature issue in the first year of his presidency, pressing for changes to insure the estimated 46 million Americans who now are without health coverage. Obama's approach would build on existing private insurance and the two federal health care programs, Medicare for older Americans and Medicaid for the poor.

The U.S. House of Representatives has pushed for legislation that includes a public health-care option, but the idea has little traction in the Senate, where lawmakers are mulling alternatives such as insurance co-operatives. In health-care town hall meetings last week, Obama suggested the co-operatives could offer an array of choices, including a public health choice.

Separately, Gibbs declined to weigh in on a $7 million annual compensation package for the new American International Group Inc. (AIG) chief executive, saying that's a matter for the administration's pay czar, Kenneth Feinberg.

Once a successful insurance company, AIG is "now a royal mess," and needs all the help it can get, Gibbs suggested. Although the company received multi-billion-dollar federal bailouts and is now 80% owned by U.S. taxpayers, Gibbs said the administration isn't interested in "micro-managing these companies."

-By Judith Burns, Dow Jones Newswires, 202-862-6692; Judith.Burns@dowjones.com