After appearing to back down from its support of a public healthcare option, the White House is signaling that the public option is not dead:

An administration official said tonight that Health and Human Services Secretary Kathleen Sebelius “misspoke” when she told CNN this morning that a government run health insurance option “is not an essential part” of reform. This official asked not to be identified in exchange for providing clarity about the intentions of the President. The official said that the White House did not intend to change its messaging and that Sebelius simply meant to echo the president, who has acknowledged that the public option is a tough sell in the Senate and is, at the same time, a must-pass for House Democrats, and is not, in the president’s view, the most important element of the reform package.

So where we stand, the public option is not officially dead but battered and bruised, not least of all due to the White House’s ebbing insistence that it be a fundamental part of reform.

Ezra Klein thinks that Sebelius’s comments yesterday don’t mark a shift in the White House’s position on the public option, because the story has been for months that President Obama supports the public option but may be open to compromise because it can’t pass the Senate:

Sebelius’s statement this week does not change the administration’s position. But it is being widely reported because it comes in context of the sagging popularity of health-care reform, and the changing conventional wisdom on the legislative politics. Namely, many think it increasingly likely that the White House will have to compromise on the public option because it will not be able to find sufficient votes in the Senate and is growing more desperate for a deal.

The administration is growing more open to a compromise in order to pass the legislation with bipartisan support, which for some reason is the only way they think they can pass any legislation, when the bill is just as close to winning bipartisan support as it was in April - not even close.

Without a public option, what reform do we have? As Howard Dean said today, “You can’t really do health reform without it.”

If this legislation goes forward without a public option, it will be on extremely shaky ground, for a number of reasons. For one, I think it will become highly susceptible to a line of attack, such as the one made on Thursday by John Stossel, which says that the bill will be a huge boon to PhRMA and the insurance industry. Stossel writes:

Big Pharma and Big Insurance want Obama-style health-care reform? It’s not so hard to understand. “The drug makers stand to gain millions of new customers,” the Times said.

This argument has weight and could stop the healthcare bill dead in its tracks. If the bill includes an individual mandate, which it probably will as a way to control costs, you can score an additional point to the argument: Obama and Congressional Democrats will force you to buy inferior coverage from greedy insurance companies; instead of penalizing the insurance fat-cats who discriminate against those with pre-existing conditions or rescind the coverage of Americans who get sick, the Democrats are actually prepared to hand them a big fat subsidy.

This is, of course, why candidate-Obama was so down on an individual mandate, but why would Democrats in Congress ever try to shape legislation in the image of the promises made by the guy who was able to win the election map in a big way?

The critics making the subsidy argument will most likely be liberals distressed by the Obama White House’s constant attempts to compromise with a small number of Republicans who are negotiating in bad faith. Liberals want to know already: when will Obama take a stand? If he won’t stand for real healthcare reform, then what will he stand for? This is the time, if there ever was one, for Obama to show he stands for more than fake bipartisanship and reconciliation. The moment is fleeting.

Conservatives could even adopt the subsidy line of attack, too. Sure, having argued for months that the insurance companies are to be protected, Republicans don’t have the standing to make such an argument, but that’s never stopped them before.

Think about this: mandating that Americans buy insurance from the health insurance mafia, as Bob Cesca has named the industry, is a great way to spur genuine populist anger.

Combine this with the facts in Congress - liberals aren’t likely to support a bill without a public option, Blue Dogs won’t support real reform, and Republicans won’t support any bill period - and you can realistically see a scenario unfold in which hopes of passing any bill die fast, Republicans win a major battle they had no place winning, and Obama and Democrats take a beating in the polls, which, if you’ll remember, have consistently shown that Americans want to see a public option that competes with private insurance companies.

This is a worst-case scenario that becomes more likely if the bill does not include a public option. It also assumes that Democrats continue to lose the message war, which, since Democrats and the White House patently refuse to present a cohesive message, can be assumed.