Is this about competition or regulation?

A few weeks back, I had a conversation with my mom, a committed Democrat, in which she said something to the effect of, “I support the public option, because it is important to give the insurance companies some real competition.”  I questioned whether this could be genuine (rather than merely a Trojan horse), if we don’t also remove the barriers to private competition.   Over the weekend, an exchange from CNN’s situation room reminded me of our conversation:

 

(HT: Cato@Liberty)

Axelrod is surprisingly forthcoming , although it is tough to get from the transcript.  He essentially says this isn’t about increasing competition, it’s about regulation.  I wish we could just have the debate on those terms.