Option 1 although good it probably won't fly well. The first step to cleaning up the existing mess it to stop rewarding doctors based on the number procedure they apply on a patient to cure them in medicare. That is probably the most insane healthcare practice and I don't think it is done anywhere else in the world.
Once the doctors realize that these current practices are not sustainable they probably will come out with some novel ideas like this one http://hbswk.hbs.edu/item/4585.html.
It doesn't really make sense to have only for profit health insurance companies, look the executive salaries (http://www.prwatch.org/node/8425#comment-4517). With the amount of money the US government is spending on healthcare it would make a lot of sense for us to have a single-payer system.