Kennedy Aligned With Health Care Reform

Updated with analysis.

Sen. Edward M. Kennedy, who died at 77 late Tuesday after suffering from brain cancer for more than a year, was closely aligned to health care reform, making his passing during the current reform debate that much more poignant.

Calling the issue the "cause of my life" in a 2008 speech at the Democratic National Convention, Kennedy worked for decades to make affordable health care coverage for all a reality.

So as the country awaits whatever reform legislation makes it through Congress, a question remains: Just what will Kennedy's loss mean to health care reform in general -- and to the companies most affected by any potentially sweeping changes.

Though his illness kept him physically away from much of the day-to-day action concerning the current health care debate, Kennedy's influence is everywhere. He helped draft one of the early health care reform bills and was reported to have kept in close contact with President Obama and others in Congress about the issue in recent weeks.

Among other reasons, it was at Kennedy's urging that the president made health care reform a key issue during his first few months in office.

Still, Jason Gurda, a health care services analyst for Leerink Swann, notes that the senator's passing means little in the long term to the reform movement and to the health care industries, since so much of the legislative machinations went on without him over the past year.

In fact, the power center in the Senate's health debate has focused on Montana Sen. Max Baucus and his Senate Finance Committee in recent months.

Also, Kennedy's passing was not entirely unexpected. Just last week, the senator sent a letter to Massachusetts legislators, pleading with them to change a special election law in order to allow Governor Deval Patrick to appoint a temporary replacement upon Kennedy's death.

In the near term, the Senator's death may breathe new life into a health care overhaul, advocates of which have languished of late under criticism from reform foes.

But Kennedy's passing still marks a clear loss of leadership, institutional knowledge, negotiating skill, and good old senatorial arm-twisting for those pushing a more universal vision of health care coverage.

In recent weeks and months, the boisterous and testy health care debate has left several believing that whatever legislation passes will be a far cry from Kennedy's ultimate vision. Ferocious protests from the right, along with dissemination of questionable information on Obama's health care plan, have left the White House and reform advocates wounded during Kennedy's absence.

Just how much that movement will be renewed, if at all, is of course as yet unknown.

"It could revitalize the push for health care reform," health care analyst Gurda said. "But do I think legislators will switch sides because of this? I don't think so."

With so much in the air, the largest players in the health care sector -- including insurance companies such as UnitedHealth(UNH Quote), WellPoint(WLP Quote), Aetna(AET Quote), and Humana(HUM Quote), along with hospitals such as Community Health Systems(CYH Quote), Universal Health Services(UHS Quote) and Tenet Healthcare(THC Quote) -- are watching with baited breath to see what ultimately results from the legislative process.

Industry players breathed a sigh of relief when the administration recently said that the so-called public option -- a mechanism meant to compete against private insurers -- may be up for debate. That signal brought ire from many on the left, who see the option as a lynchpin in reforming the multi-trillion dollar health care system.

Meanwhile, the reform debate took another hit Tuesday when both the Office of Management and Budget and Congressional Budget Office each raised their deficit estimates, offering competing but similarly bleak assessments of current spending levels and calling into question massive proposals like health care reform.

Kennedy died shortly before midnight Tuesday at his home in Hyannis Port.

-- Reported by Sung Moss in New York.