There are a lot of things about the health care reform process that have been, as President Obama likes to say, "not perfect" - to say the least. The Stupak amendment may have been the straw that breaks the camel's back for progressives. It may be the one step too far that makes people reassess what's really being accomplished with this reform (and what's not) and forces them to reevaluate where the slow step-by-step process of negotiation and compromise has actually led.
What I see at this point is a convoluted solution designed to provide government subsidization for an industry that provides a product that a large proportion of the population wants and needs but can no longer afford, except in a precarious and cheapened form.
The rational thing to do, of course, would have been to provide universal single-payer health insurance. It wasn't done, for whatever reason. The Democratic leadership didn't want to expend their political capital on creating the momentum for it. No doubt the route they've taken was the price for not having the insurance industry fight tooth and nail against the entire reform effort the way they've done against the public option.
So, what the Democrats have had to do in order to get some kind of reform is to prop up an industry that no longer really provides a worthwhile product at an affordable price but that has tremendous amounts of money and clout with lawmakers. Instead of the government directly intervening to keep prices down by negotiating rates with health care providers on behalf of the entire population the way, for example, the Canadian provinces do in their single-payer system, the federal government will be subsidizing individuals so that they can afford to purchase the insurance industry's crappy and otherwise unaffordable products.
It's twisted, corrupt, and hugely inefficient. The fetishization of markets all these years has been because markets root out the inefficient businesses and industries and kill them. This reform process props up the zombie for a while longer, and may temporarily relieve the pain of the American people crying out for some kind of help getting health care they increasingly can't afford, but it isn't a real or sustainable solution to the problem.
The most brilliant solution I've seen for getting out of this whole conundrum that health care reform has become actually pivots on the Stupak debacle. BTD sets it out (here and here):
I have two suggestions - exclude the individual mandate (but maintain, as the House does, the employer mandate) and eliminate the exchange....
The individual mandate is problematic in that it forces individual(s) to purchase insurance. Since individuals who cannot afford insurance will still be mandated, they are forced to purchase insurance with federal government subsidies, the use of the subsidies will require that these individuals purchase insurance that does not cover abortions. To avoid this, the mandates should be eliminated and the federal subsidies could be made voluntary. Under this scenario, no one would be forced to purchase insurance that does not cover abortions, but they would have that option, including the option to purchase public health insurance (the public option.)
Similarly, elimination of the exchange will remove the threat that insurance companies will strip abortion coverage from their policies in order to qualify for the exchange. Of course many will do so in order to be eligible for the federal subsidies, but this is the case with state run Medicaid programs (remember the largest expansion of coverage under health care reform comes from the increase in Medicaid eligibility.)...
{E}liminate the exchange... the exchange is the catalyst for the Stupak problem) and apply the federal subsidies to purchase of insurance under the public option. In short, eliminate the availability of federal subsides for the purchase of private insurance. That way, private insurance companies will never be impacted by the Stupak Amendment.
The exchange has only ever been a small stick to enforce regulation anyway: Meet these standards if you want to be allowed to offer insurance in the exchange. But without premium caps, regulation is meaningless. The insurance companies will just raise their rates and let the economics of it deal with regulations they find inconvenient...and then blame the government for not providing enough in the way of subsidies.
The way out of the mess, including the Stupak mess, is to not provide subsidies to private insurance altogether, just to a public option, which is already restricted by Hyde, and which then should be opened to everyone. To do this you have to kill the exchange, but it's no great loss anyway. Doing this would give the public plan - the only really significant aspect of reform, IMO - a huge boost.