Already the talking heads are bleating about "too much government". This is Massachusetts we're talking about; it's not about "too much government".
No, it is about—and has always been about—the belief that the Dems got into office and, instead of changing anything, bellied up to the lobbyists' tables and ate their fill at the American people's expense, just as the Republicans did. Of course, the Republicans weren't quite as hypocritical about it.
And, yes, that means it's really about the bailout, and about the economy. It has ALWAYS been about the economy. There is a disconnect between the people they see on television chattering about how the "economy is rebounding", and their experiences as workers, small businessmen, and the increasingly-desperate unemployed. They sense that they've been had, and the Republicans are (as ever) adroit about exploiting it while the Dems are busy stumbling around like idiots.
So, is health care now dead? Depends. I suspect that, considering this IS the Dems we're talking about, they'll try to leverage some BS about "moving towards the center" to pressure progressives in the House into passing the Senate bill. They've spent the entire past year pissing on progressives and calling it rain, no reason to think that they'd stop now.
If they smarten up, realize this has nothing to do with "big government" and everything to do with the perception of who they're governing for, they might be able to turn this around and exploit reconciliation to get a (better) bill on to Obama's desk.
But if they were that smart, Brown would never have won to begin with.