President Obama’s campaign for health care reform by this fall, once considered highly likely to succeed, suddenly appears in real jeopardy.

Top White House advisers, especially Chief of Staff Rahm Emanuel, are still privately predicting massive changes to the health care system in 2009. But for the first time, Democrats on Capitol Hill and in the administration are expressing frank worries about stronger-than-expected opposition from moderate Democrats and worse-than-expected estimates for how much the plan could cost.

Business groups, which had embraced the idea of reform and have been meeting quietly with Democrats for months in an effort to shape the legislation, now talk of spending millions of dollars to oppose the latest proposals out of Capitol Hill. And Democrats themselves are not united, with leading party figures making contradictory declarations about how far they should go to overhaul the system when deficits are soaring and prospects for an economic recovery remain cloudy.

And top Democratic officials tell POLITICO they are increasingly pessimistic about getting any more Republican votes than they did on the stimulus package, with some aides referring to the idea of a bipartisan bill as “fools’ gold” — an unattainable waste of time.

“This was always going to be messy,” said a senior administration strategist. “It got messy faster and earlier than people thought. But none of it is anything that’s going to stop it.”

Emanuel is anxious for the president to sign the new law by October so that Democrats have a year to campaign on it ahead of congressional midterms, aides say. Administration officials concede the new kinks in the schedule make that harder.

It has been conventional wisdom Obama would overcome a sluggish start by congressional Democrats to win approval of his plan this fall – perhaps even backed by a notable number of Republicans. But there is growing list of reasons this conventional wisdom could be wrong:

Money troubles

Public anxiety about red ink – muted during this winter’s debate over an economic stimulus package – has come roaring back, with a Gallup Poll showing deficits and spending as the only issues where more people disapprove of Obama’s performance than approve of it.

Republicans think the “borrow and spend” issue may be the biggest single vulnerability for Obama and the Democrats in the midterm congressional elections of 2010 and the presidential year of 2012. The president’s own advisers privately agree.

That’s one of the reasons Obama is emphasizing what he calls “savings” – otherwise known as cuts – that would help pay for his plans.

That is why Democrats admit that it was a public-relations disaster this week when the Congressional Budget Office issued a report this week concluding, from a partial draft of a Senate health committee bill, that the plan would cost $1 trillion over 10 years but only provide coverage for 16 million of the estimated 50 million Americans who are uninsured.

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Sen. John McCain (R-Ariz.), a member of the health committee, said on Fox News Thursday that he considers the CBO finding “a devastating blow to the administration’s plan.”

Sen. Max Baucus (D-Mont.) now says Democrats will need to come up with a bill that costs less than $1 trillion – but many liberals say it would be meaningless to do something that small and leave so many people still uninsured.

A Crowded Stage

Everyone has big ideas for changing the health care system – and many lawmakers have waited years, in some cases their entire careers—to put their stamp on it.

That’s why you have clashing Democratic ideas from Obama, Sen. Ted Kennedy (Mass.), Baucus, Rep. Henry Waxman (Calif.) and many others.

Democrats say they sorely miss the constant presence of Kennedy, chairman of the health committee and longtime champion of the issue, who has retreated to Massachusetts as he battles cancer.

Some worried officials say Kennedy would never have allowed the strategic blunder of submitting the incomplete health committee bill for CBO scoring, which produced estimates that have been a public-relations nightmare.

Without Kennedy to mediate Democratic infighting, Obama and his top aides are going to have to do it. But based on the lessons learned from the disastrous White House micromanaging of health care under President Bill Clinton back in 1993, Obama’s aides are holding off for now, letting Congress find its own way.

“It’s too soon to be cracking heads,” said one to administration official.

At some point they will probably have to be more immersed in the deal-making because there are many moderate Democrats who are cool to many of the ideas pushed by Obama and their congressional leaders.

False Hope

For most of this year, it has appeared that Obama and business interests were searching for common ground. But this was always somewhat of a charade. It was in the political self-interest of Obama and the business community to go through the motions of working together—even while reserving the option to go to war.

As details have emerged, business groups that had sounded supportive are suddenly openly critical, with the U.S. Chamber of Commerce referring to the Senate health committee blueprint as “a dangerous proposal” in an e-mail to members.

Insurance companies see an existential threat in Obama’s plan to include an option for government coverage, even though the administration says it is not meant to drive the industry out of business. But health finance experts believe such a plan would inevitably drain dollars from the private-sector market.

It is virtually impossible to sketch out a plan that can pass a Democratic Congress – and contain some version of a public option for insurance – that will not provoke a major backlash among the best-funded business groups. This means millions of dollars in TV ads warning of government attempts to control and ration care.

Recognizing the need to woo an increasingly skeptical public, House Democrats on Friday afternoon plan to release – in conjunction with their draft health reform bill – a new pitch called “12 Ways Health Care Reform Will Help You and Your Family.”

The House Democrats’ description paints a utopian picture: lower costs, including more affordable monthly premiums, an annual cap on out-of-pocket expenses and “an end to rate increases based on preexisting conditions, age or gender”; “greater choice” and “peace of mind” so that job a life choices don’t have to be based on insurance considerations.

“No more denial of coverage for preexisting conditions like diabetes, cancer or heart disease,” a late draft of the document says. “More family doctors and nurses entering the workforce at better payment rates.”

Big bang backfire

The White House’s “big bang” theory of proposing a raft of landmark legislation all at once is giving way to fears of a “big chaos” backlash. Congressional chairmen saying that the pipes are overloaded between health-care and climate legislation – and that was before this week’s arrival of the biggest overhaul of financial regulations in 70 years.

And don’t forget Congress needs to fit in work on all of its annual spending bills and take a month off in August.

This mad rush of legislation is posing fiscal and tactical problems for Democrats.

They simply don’t have the money to change the health care system, overhaul the energy sector and increase domestic spending as part of the appropriations process – without imposing big tax increases or exploding the deficit. Something has to give. Even if they did, the gears of Congress move slowly. Any or all of these proposals could easily jam them up.

To keep the pressure on, the Democratic National Committee embarked this week on a major fundraising campaign for a “Summer Organizer Program” that will hire hundreds of staffers for Organizing for America, the new name for the Obama campaign’s grassroots organization. The plan is to build a summer grassroots campaign around health care, an effort strategists believe will later morph into Obama’s reelection army.

“Please donate whatever you can afford to support the campaign for real health care reform in 2009,” pleads an e-mail purporting to come directly from “President Barack Obama.” “The campaign to pass real health care reform in 2009 is the biggest test of our movement since the election. … To prevail, we must once more build a coast-to-coast operation ready to knock on doors, deploy volunteers, get out the facts, and show the world how real change happens in America.

The enemy smells blood

Republicans did a poor job of trying to stop the economic stimulus bill earlier this year, in part because they were confounded by a popular president with very few obvious weak spots.

Obama remains popular, and his ideas for fixing health care remain more popular than the Republican’s. But Obama’s vulnerabilities are starting to show.

Public concerns with heavy government spending are rising. A new NBC/Wall Street Journal poll found more people want the focus to be on deficit reduction, not new spending to boost the economy.

The public is also expressing unease with the government’s increasing role in the economy. Republicans have a lot of practice in warning voters about socialized medicine and government-mandated rationing, and the NBC-WSJ poll suggests these warnings could work again.

Republicans came out with the outlines of their own plan this week. But few will pay attention to a health care plan by the out-of-power party that has zero chance of becoming law. They know they win by Obama losing.

Tags: Administration Officials, Bipartisan Bill, Business Groups, Capitol Hill, Congressional Democrats, Conventional Wisdom, Democratic Officials, Economic Recovery, Fools Gold, Health Care Reform, Health Care System, Kinks, Massive Changes, Moderate Democrats, Rahm Emanuel, Republican Votes, Senior Administration, Stimulus Package, Strategist, Waste Of Time