Mayo Clinic primary care clinic in Arizona to drop Medicare

It's no surprise. A Mayo Clinic primary care clinic in Arizona will be dropping Medicare coverage. According to this article on Bloomberg:

The Mayo organization had 3,700 staff physicians and scientists and treated 526,000 patients in 2008. It lost $840 million last year on Medicare, the government’s health program for the disabled and those 65 and older, Mayo spokeswoman Lynn Closway said.

If medical groups are dropping Medicare coverage, what does this suggest for the proposed health care reform plan that will include a Public Option? If physicians and medical groups choose to drop Medicare and eventually adopt a cash-only practice model, then what will be the value of health insurance? If patients are directly dealing with claims reimbursement, wouldn't that be interesting?