Some people are just ignorant (rather than stupid.)
After all, they think what we have now, outside the government sector, is basically a free market. We know it's not nearly free, because if it was it would be...free, not state-regulated.
What really seems to confuse the uninitiated is "privatization." Somehow, they think when a company does something instead of the government, that's free market. They neglect the effects of legislation--sometimes to the point of creating a monopoly with few variations in service options, let alone providers.
This case is a little different from that. Somehow, they think that since the county folks have the option of choosing the municipal offering at a set price, or nothing, that's free market (or literally, in the case of the one blog, "libertarian".) We know that the market isn't even involved in this case, but they see a choice and they think that implies freedom (thanks, Milton Freedman!) Everyone, including convicts, gets choices. It doesn't make them free, and it has little, if anything, to do with a free market. As the convict knows, his ability to make choices within his cell cannot be construed as liberty.