This sounds like the kind of sentence people say but wouldn’t write. A paraphrase would be (missing out some of the more flowery excrescences):
They see that it is a fatal conceit to have the government as the sole health care regulator together with the individual mandate.
A word on a couple of the phrases here.
- Fatal conceit means something like deadly pride or lethal hubris, I think. However, another meaning of conceit is concept, so that the phrase could mean lethal concept/idea—though I doubt that this is what’s meant.
- Individual mandate means a mandate (order) on the individual to do something, in this case, from memory, to purchase health insurance.
The difficulty with the quoted version is that the speaker (rather than writer, I assume) begins a lengthy description (a participial phrase modifying a participial phrase containing two partially redundant adjectives). They then tack on another phrase (and then the individual mandate), which it is hard to integrate into the growing sentence (what, for instance, is the elided verb meant to be?). Finally, they reach it is a fatal conceit. This forces you to interpret everything that has gone before as a hanging topic (e.g.: The economy, it’s central to the debate). But the result feels zeugmatic: it is is singular, but having the government and the individual mandate sound like separate things, so we expect a plural.
In sum, I sort of feel you deserve congratulations for not quite understanding the original.