Democrats cave on public option

Since it appears that Senate Republicans are determined to scuttle any health care bill containing a public option, it seems prudent for Obama to shrug and say it's only a small part of the overall health reform package. He's agreed to consider instead, a Republican proposal for Health Insurance Cooperatives that would give individuals greater barginuing power and thereby potentially better rates. But that wouldn't represent a chalenge to existing insurance rates, it would only guarantee that the cooperatives would be able to offer the same inflated rates in existance today.
In a deficit neutral bill, the discount if any offered by cooperatives would have to come from savings in medicare and medicaid and or increased taxes on persons earning greater than $250,000 anually, or the limit on charatable deductions allowable persons in the highest income brackets.
But I don't see how this is going to work if there is no mandate for everyone to carry health insurance. Not when the Health Care Reform bill would guarantee coverage regardless of a preexisting condition or the onset of an illness. Good luck trying to get young healthy adults to buy health insurance when they can wait until they get sick and not worry about being rejected for their pre-existing condition.
Using the auto insurance model, what if it is mandated that every American must carry health insurance, and at a minimum must be protected from catastrophic expenses, over some predetermined amount. Such coverage could be offered by private insurers or some already existing government plan such as medicare in order to avoid creation of another layer of burochracy.