The Obama administration hasn't given up on the idea of the 'public option', they've only changed PR strategies.
Rather than continue beating what even many of their own fellow democrats now consider a dead horse, they're just choosing to bury the dead one inside a Trojan horse bearing the friendlier sounding moniker of "co-ops".
In fact, I'm quite sure they had this 'compromise' ready to go from the very beginning.
It's a classic bait & switch subterfuge, only this time it's not actually a different defective product they're switching to - they're just peddling the same toxic crypto-fascist junk under a less-scary socialist name.
You are probably right. I think they gave this a flier and met much more vocal resistance than they expected, so now they're dropping back to Plan B. It's far from over.
It is still snake oil they are peddling. The old medicine men used the same tactic as they moved from town to town. At some point the fact that the "medicine" they sold to some people down the road doesn't work. Well, the old guy would say he already knew that and had sent the whole batch back and then pulled out a "new improved" bottle. It is as old as the hills folks and some people are still buying it. Sad.