This is a rush transcript of "Special Report With Bret Baier" from August 18, 2009. This copy may not be in its final form and may be updated.

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PRESIDENT BARACK OBAMA: Any plan I sign must include an insurance exchange, a one-stop shopping marketplace where you can compare the benefits, costs, and track records of a variety of plans, including a public option to increase competition and keep insurance companies honest.

The public option, whether we have it or we don't have it, is not the entirety of health care reform. This is just one sliver of it, one aspect of it.

KATHLEEN SEBELIUS, HEALTH AND HUMAN SERVICES SECRETARY: That is not the essential element.

JOHN KING, CNN ANCHOR: So the public option is not a deal breaker from the president's standpoint?

SEBELIUS: Well, I think there will be a competitor to private insurers, so that is really the essential part.

Sunday must have been a very slow news day, because here's the bottom line. Absolutely nothing has changed.

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BAIER: Well there you see the evolution of nothing changing from the administration's point of view about the public option, which is government-run health insurance.

They wanted at one point for it to be a part of a plan on the table to compete against private health insurance companies, but there is some debate about whether they're abandoning that position or wanted to over the weekend.

So what about all of this? Let's bring in our panel, Fred Barnes, Executive Editor of "The Weekly Standard," Juan Williams, news analyst for National Public Radio, and syndicated columnist Charles Krauthammer.

Fred, you saw the evolution there. What are your thoughts?

FRED BARNES, EXECUTIVE EDITOR, "THE WEEKLY STANDARD": My thought is that President Obama is being batted around like a tennis ball. First he finds that the public plan is not passable. You can't get a health care reform bill as long as that it in it.

So Secretary Sebelius and President Obama give hints that, OK, we are not going to insist on that, then there are these co-ops, or something like that. And then what happens? Well then the liberals, particularly in the House, they bat the ball back and say, wait a minute, we're not going to pass, we're not going to vote for a reform bill if you don't have them in there.

And then we get a batting back from Secretary Sebelius saying well, I don't know how anybody thought we were abandoning the public plan.

Look, this means when the administration is in this shape over key elements on their bill, they're hurting. I mean, they're not going to get a health care reform bill through this way.

BAIER: Juan?

JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: I think this is all about compromise. I think that the — right now you have Secretary Sebelius floating a trial balloon. She's on the wrong end of the balloon, because she is the one floating away, not the balloon.

Because just a Fred described, what has happened in response to the trial balloon is there has been a lot of fire coming from the left, saying how can you have — Howard Dean, you know, Paul Krugman of "The New York Times" the columnist, saying how can you have health reform that has any kind of substantial effort without a public option?

BAIER: But it wasn't just Secretary Sebelius. You heard the president there in Colorado saying it is just a sliver, whether we have it or whether we don't.

WILLIAMS: I agree.

BAIER: He was not firmly defending a public option.

WILLIAMS: No, that's exactly his position, Bret, I think his position, Sebelius' position, it's the administration's position. And they were putting it out there that they are willing to move away from that if that's going to be an obstacle specifically for conservative Democrats, and here I'm talking about people like Senator Ken Conrad, I'm talking about Max Baucus, both on the Senate finance committee, and both have said they're likely not to vote for any health reform proposal that includes a public option. So they're looking for different ways to approach it that will get to you the same goal, but get the necessary votes so you can have a successful health care legislation put in place.

BAIER: But Charles, the interesting thing, before you make your point, don't they realize that everybody is watching this debate so closely? People are really paying attention to every word that is back and forth. So did they think, the administration think that they would put this out there and then take it back and say nothing is different?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think what they are doing is they're relying on Juan to put the ultimate spin on it and make it sound consistent.

What's endearing here is the way that Ms. Sebelius has adopted the Obama habit of saying that I have never ever changed or wavered. Remember Obama did that when he said at first he wouldn't take public monies in campaigns, and then of course he did. He changed his mind on eavesdropping and wiretapping and pretended he didn't.

He always says, "As I have always said, I never changed." And of course, if you are a omniscient, omnipotent, and unerring, then obviously it is in the eye of the beholder who is not able to read Obama's scripture correctly.

He clearly has shifted radically. You can't say on the one hand it must be in the bill I sign, and then say it is only a sliver and pretend you are inconsistent.

What happened is they understand what with the public the public anger is so high they will pass nothing, and that is why it is abandoned. All of this is a way to placate the left, which understands it is a kabuki dance. It's a way of pretending that it's still on the table. It's off. It's gone. It's dead. It is a dead parrot.

BAIER: So the alternative is said to be the cooperative, which the Senate Finance Committee is looking at. Regional cooperatives, here's the definition — "small businesses, small cities band together to negotiate health insurance coverage for employees and citizens in a not-for-profit alliance."

Essentially like a credit union, some electric cooperatives. Fred, what about people trying to understand the pros and cons of co-ops?

BARNES: Who knows what kind of co-op they're talking about? You can have all kinds of co-ops. You can have a co-op that just offers insurance and steers to you health insurers, or you can have a co-op, as there are a couple of them, that actually run hospitals and have doctors and so on. I mean, who knows what they're talking about?

Here is what is significant to a lot of Republicans, and the person talking about this today was Senator Jon Kyl of Arizona, who is the number two Republican senator, saying, look, all the Democratic senators, and he quoted a whole bunch of them, have said OK, the co-ops are fine. We'll make them look just like the public plan, and it will do the same thing.

I mean, co-ops aren't as dead as the public plan is, but, boy, they're not off to a good start.

BAIER: Democrats, Fred, would say Republicans then aren't going to sign on to anything.

BARNES: I'll tell you one thing they're not going to sign on to. They're not going to sign on to a bill when the president runs around talking about how much he wants to cut health care costs and he won't do the one thing, as Charles has written, that would cut health care costs more than anything else, and that's tort reform, to cut back on abusive lawsuits. And the president won't do that, which undermines his entire argument about I want to cut costs.

BAIER: Juan, there are a lot of questions about co-ops still, because we just don't know.

WILLIAMS: We don't know, and I think that — I don't agree with Fred about tort reform. I do think you need to limit it, but you can't take away that as an option for people who have been treated badly by doctors.

No, I think the big — the question here is cost. You have to have, I think the estimate is $6 billion from the federal government to help some of these co-ops get started as a viable mechanism for providing competition to the existing insurance companies.

The insurance companies, I must say, they're the ones that have brought about so much of this crisis. People feel that they cannot negotiate fairly with insurance companies, that if they shift jobs, they lose their insurance, that they because of preexisting illnesses are excluded from insurance.

Somebody has to rein in the insurance company, and this is an effort to do it. And this is why you have cooperatives that may prove to be the successful mechanism.

BAIER: Maybe they can use the unspent stimulus dollars — Charles?

KRAUTHAMMER: The billions that the government will put in as so- called seed money, the problem with that is not cost. It's control.

If you are a liberal and you understand that the public option is dead, you would want to have a cooperative with the feds putting all the money in. And then there's a pretense that it is run by the members.

If the money is federal dough, the feds are going to be in control. And, for example, if a co-op goes bust, then the creditor, as in the bankruptcy court, inherits it, and they would have control of the co-op, and it would be a seed of a public option, which is what the liberals would want.

BAIER: Up next, the panel will discuss the life and work of our colleague, Robert Novak, who passed away today.

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ROBERT NOVAK, REPORTER: I have sources who are young enough to be my grandchildren, you know. And I don't have any pride in calling them up and taking them you out to lunch. And the only way — I'm just a — I'm a reporter, and the only way I can write a column is if I have information to put into it.

My role model as a columnist was Joe Alsop who, whatever fault he had, he reported every day of his life. And I report every day, seeing people on the phone and doing it any way I can function.

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BAIER: Columnist, pundit, author, and friend to a lot of people here at FOX News Channel. Robert Novak died today. He was known by many here in Washington as a, really, a columnist who reported his column, a real shoe leather kind of guy.

We are back with the panel with some thoughts. Juan, that was an interview that you did with Robert Novak back in 1998. Your thoughts on the man and his legacy.

WILLIAMS: I think that he really expressed something very important there, Bret, which is that he was a real reporter. He had been a reporter at "The Wall Street Journal" in Chicago, and he had come up and developed the idea that you put out real information.

And what it became was kind of a live wire for everybody who was the inside group in Washington, D.C. Political insiders would read Novak, and it was almost like you were reading tea leaves to see what was exactly in that column, what was the latest on the grapevine of the people who are most inside the political universe here in D.C.

The thing that really always struck me about Bob Novak was that he persisted in the reporting. He never stopped. People would say Bob know Novak is ideological. Some people on the left would say he was the prince of darkness.

Bob Novak would take on Republicans as well as Democrats. Bob Novak was an honest reporter, and for me an inspiration in that sense, a tough guy. I used to co-host "Crossfire" with him and everything like that, and he was the kind of person who would pin you to the wall because he had good information.

BAIER: Fred, you were a close friend.

BARNES: I was. I knew him 36 years. Among others things, as you know, Juan, Bob was a great basketball fan, one of the most astute fans I have ever known. We sat next to each other at the Washington Wizards games for 35 years. It's a long time.

And he was a better reporter than Joe Alsop who he cited in that interview, because Bob thought every column ought to have, if not a big scoop, it ought to have at least some nuggets of new information that people hadn't heard before.

And along with what Juan was saying, Bob was a conservative, but he wasn't partisan. He would pound Republicans if he thought they were slipping away from the conservative position they should have taken, and Democrats, of course, were never there, so he would pound them as well. And he basically terrified official Washington. They were afraid of him because they knew he was an honest guy who would take any of them on. If he had good information, he was going to report it.

KRAUTHAMMER: That's what made him so influential and really unique was his independence. He was a reporter, but what he did by writing his reportage in a column was he severed any control any editor or managing editor would have had over the content or placement of his material. Nobody edited him. He was his column. So he was out there as a reporter on his own.

And there was a second kind of independence he had, which was he was a consummated insider. And he succeed the great early 20th century columnist like Walter Lippman who were also insiders but who were actually part of administrations. Lippman worked with Woodrow Wilson.

He was an insider who knew everybody, but he was never a member of a team. So he was always independent politically and also editorially. That's why he was important, and that's why he was respected, and that's why he will be missed.

BAIER: Fred, late in life, did he ever regret being part of the story in the Valerie Plame case when he reported that?

BARNES: That was one of the lesser events in his career as a reporter. He was the first guy to report that she had gotten her husband off of his assignment from the CIA, and he put it in his column, and though he did exactly the right thing, which, of course, he did.

So look, there were bigger feats of reporting than that that he pulled off, many, many of them.

WILLIAMS: And I think people forget that it wasn't that somebody fed him this on an ideological basis. It was a function of his reporting that went out there and got the information, and then it turned out to be in this way.

And one last thing to say is he had a wonderful wife Geraldine, and I think all of us here on the panel want to say, you know, Geraldine, our love goes out to you.

BAIER: Our condolences.

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