The August deadline for a health care reform bill on the president’s desk was never realistic. But it was plausible to set an August deadline for two disparate bills passing the House and Senate, leaving a month or two to work out the kinks and come up with a compromise plan. Now, however, it is looking increasingly unlikely that even this deadline can be met.

[IMGCAP(1)]President Barack Obama had good reasons for wanting a tight deadline: First, the longer time passes without a bill, the more antsy voters become about the prospect of losing what they have for the if-come-maybe of what Washington might produce. Voters are not thrilled with the health system, from the uncertainty of retaining coverage to the possibility of being bankrupted by a health disaster in the family. But this is another area where the devil we know grows more comfortable as unease grows about the devil we don’t know. And the fact is that the vacuum created in the past couple of months before the president turned his full attention and resources to health care reform and while the other potent public force for reform, Sen. Edward Kennedy (D-Mass.), was sidelined, enabled the doubts about the direction of the program to grow dangerously.

The health issue is tough enough that any loss of momentum or seeming impasse changes the dynamic surrounding the issue dramatically. The biggest plus for the president up to now has been the surprisingly strong willingness of the major provider groups to engage on the issue — a huge contrast from what Bill and Hillary Clinton faced in 1994. But that could easily change. If provider groups and others (including deal-oriented Republican lawmakers) believe that a bill is no longer likely to pass, they will behave very differently.

So will some key Republicans. If the conventional wisdom accepts the thesis that the president’s power is waning and that Obama health care reform is going the path of Clinton health care reform, Republicans will put intense pressure on any of their own willing to consider working with the Democrats. That is what happened in 1994 to John Chafee, the late GOP Senator from Rhode Island who was bludgeoned back from his deal-making posture when his colleagues smelled blood on the Clinton plan.

To be sure, the Clintons still could have had a bill enacted if they had been able to keep their Democrats together, and that is just as true with Obama in 2009. Obama has to alter that part of the dynamic from 1994 — to convince Congressional Democrats that failure is not an option. If they harden into their positions, with Blue Dogs and liberals alike demanding too much, the results will be disastrous for all.

This is doable. First, the White House and Congressional leaders need to keep Blue Dog Democrats in the room by finding realistic ways to bend the cost curve (the new but appropriate cliché) on future health spending growth. And that means having them in the room in the first place to help negotiate an acceptable plan.

Substantively, the president and Congressional leaders have to move quickly to heed the warnings given by many health professionals on the ground, ranging from the Mayo Clinic to conservatives like my American Enterprise Institute colleague Scott Gottlieb. Real reform requires more than insuring everybody and providing many forms, public or private to do so. It means changing the system away from its fee-for-service mentality as much as possible to an outcomes-driven and patient-driven mindset and structure. And that has to start with the biggest and most important candidate for major reform, Medicare.

I do not believe it would be all that difficult to find a big share of the $236 billion in excess costs in the House version of the reform bill projected by the Congressional Budget Office by pinpointing ways to reform Medicare delivery, payment formulas for providers and absurd rules (see my earlier screed against the insane way Medicare penalizes kidney transplant patients and rewards vastly more expensive dialysis patients, at a cost of huge dollars and quality of life for one potent example).

Next, the president needs to get his party members together on a realistic way to raise revenues to pay for the rest of the program. I believe, along with legions of reformers left and right, that capping the tax benefit of gold-plated health insurance plans is a win/win — good substance, changing incentives in the appropriate way, and good money at the same time. Setting the amount higher for the cap means less revenue, but it also may bring enough votes to make it worthwhile.

But the White House has to change its attitude on this one and use the muscle of a president popular with labor to keep its opposition from undermining the whole bill. A combination of a tax on millionaires and a high cap on health plans’ tax-free status could do the trick.

Third, the president needs to make it clear to the vast majority of his Congressional Democrats that the perfect or even the very good cannot be the enemy of the merely acceptable. The goal here has to be a bill that can get a majority from Democrats in the House and a bill that can get 60 votes in the Senate. Reconciliation is too crude a tool in this case to support any really meaningful health bill. It may not be possible to get all 60 Democrats to support any bill, especially when one or two may have difficulty getting to the floor to vote. But if a bill passes the House, and 57 Democrats are willing to support a version in the Senate, I think it is very doable to find a handful of Republicans willing to consider support.

A public option could be a part of a House package, especially if Blue Dogs and other fiscal conservatives are convinced that real cost-reducing reforms are also integral. Energy and Commerce Chairman Henry Waxman (D-Calif.) may well be able to weave his magic here, just as he did with Rep. Ed Markey (D-Mass.) on climate change. But a robust public plan is very unlikely to attract enough support to get through the Senate. An alternative, whether it is along the lines of Sen. Kent Conrad’s (D-N.D.) cooperatives or Sen. Olympia Snowe’s (R-Maine) trigger to get a public plan five years down the road if private plans do not measure up, has to be found.

Republicans and conservative activists are already smelling blood. In a déjà vu all over again moment, Bill Kristol is reprising his 1994 role and calling for total demolition of health care reform. The president and his Congressional allies cannot dawdle. But they have to take some serious steps soon to keep history from repeating itself.

Norman Ornstein is a senior fellow at the American Enterprise Institute.