According to Politico, the president will not insist on a public option:

Obama is considering detailing his health-care demands in a major speech as soon as next week, when Congress returns from the August recess. And although House leaders have said their members will demand the inclusion of a public insurance option, Obama has no plans to insist on it himself, the officials said.
“We’re entering a new season,” senior adviser David Axelrod said in a telephone interview. “It’s time to synthesize and harmonize these strands and get this done. We’re confident that we can do that. But obviously it is a different phase. We’re going to approach it in a different way. The president is going to be very active.”
On health care, Obama’s willingness to forgo the public option is sure to anger his party’s liberal base. But some administration officials welcome a showdown with liberal lawmakers if they argue they would rather have no health care law than an incremental one. The confrontation would allow Obama to show he is willing to stare down his own party to get things done.
“We have been saying all along that the most important part of this debate is not the public option, but rather ensuring choice and competition,” an aide said. “There are lots of different ways to get there.”

And he’s happy to fight with liberals over his decision:

Obama’s specifics will include many of the principles he has spelled out before, and aides did not want to telegraph make-or-break demands. But Axelrod and others are making plain that Obama will assert himself more aggressively — a clear sign that the president will start dictating terms to Congress.
“His goal is to create the best possible situation for consumers, create competition and choice,” Axelrod said. “We want to bring a measure of security to people who have health insurance today. We want to help those who don’t have coverage today, because they can’t afford it, get insurance they can afford. And we want to do it in a way that reduces the overall cost of the system as a whole.”