NEWS ANALYSIS - Healthcare deadlock shows difficulty of defining the government's role

Instead, lawmakers fell back into the old pattern of harsh partisan rhetoric and stalemate. Congress and the president could not even agree on expanding a popular health insurance program for children that was up for renewal.

The failure to act underscores how hard the healthcare problem is to deal with, and it puts the issue squarely in the laps of the presidential candidates in both parties.

The debate over expanding the children's program uncovered the main fault line in the discussion of broader reforms: how far government should go to help middle-class families struggling to afford healthcare. It also reaffirmed a key political lesson: Major changes can't get accomplished in a divided government without support from all the key players.

"A lot of people will say, 'If Congress couldn't pass legislation with respect to children, how could we possibly go on to a broader effort to fix healthcare?' " said Sen. Ron Wyden (D-Ore.). "But I am a contrarian on this issue. I am still confident there is the capacity to deal with healthcare on a broader basis, and both sides can secure what they want most: Democrats making sure everybody gets covered -- because that's how you rein in costs -- and Republicans being able to say, 'Look, the government is not running healthcare.' "

Though many Americans may not realize it, government is already the dominant player in healthcare, with federal and state expenditures accounting for 47% of the projected $2.3 trillion the nation will spend this year. Indeed, many private insurers follow the lead of the biggest government program, Medicare, in setting coverage policies.

Even if nothing changes, government will pick up more than half the nation's healthcare tab by 2017. Universal coverage proposals from the leading Democratic presidential candidates would advance that tipping point to 2011, according to a recent analysis by the consulting firm PricewaterhouseCoopers.

Leading Republican healthcare experts acknowledge the trend toward a greater role for government -- indeed, Bush himself accelerated it when he signed the Medicare prescription drug benefit. But some of the GOP experts say the goal now should be to find a balance that preserves private insurance for most Americans workers and their families.