The worst fears of the Democrats have come true. They have blown their safest Senate seat, Massachusetts, held for long by that doughty champion of healthcare for the less fortunate, the late Edward Kennedy.
Democrat Martha Coakley conceded she had lost the election after partial results gave Republican Scott Brown a healthy lead.
For the past three years, Coakley has been Massachusetts' attorney general. She previously spent eight years as the district attorney for Middlesex.
Coakley was criticized for running a lackluster campaign and not fighting hard enough for the seat. Massachusetts is considered a Democratic stronghold, but, by most accounts, Coakley was unable to fire up her party.
The Republican win now has robbed the Democrats of their filibuster-proof 60-seat majority in the Senate.
This will make it much harder for Mr Obama to pass a healthcare reform bill. Filibustering is a method used to delay approval of laws by prolonging debate - may include large numbers of amendments, spurious points of order and very long speeches. If the session runs out of time, motions cannot be voted on.
During the campaigning, Scott Brown made it clear he would act as the Republican party's "41st vote" in the Senate to effectively filibuster the Democrats' health care overhaul.
He could squash the compromise bill House and Senate Democrats are nearly finished drawing up.
Both the House and Senate have passed their own versions of reform, but after the bills are merged, both chambers will have to vote on the new version before sending it to President Obama's desk.
Instead, the White House and Senate Democrats may ask House Democrats to simply pass the bill already approved by the Senate, according to multiple reports. However, there is serious doubt that the Senate bill could even pass the House, commentators say.
Accepting the Senate bill in toto would be a bitter pill for liberal Democrats to swallow after already making a series of compromises to pass the House health care bill.
More even than healthcare, what should be borne in mind is the Massachusetts verdict could be a clear indicator of people's disenchantment with the Obama presidency.
His popularity is at an all time low. His last minute air-dash to pitch for Ms. Coakley didn't help. And this where no Republican has won a U.S. Senate race since 1972. Democrats control the state's congressional delegation. They also hold the state's governorship, along with overwhelming majorities in the state legislature. Their voters outnumber Republicans three to one. Still the humiliating debacle.
Both on the economic and healthcare fronts, Barack Obama is faltering miserably. His compromises have not made him any the more popular. Perhaps people think he is very indecisive, not the man who had galvanized the underdogs, vowing We Can.
The result doesn't bode well at all for the mid-term elections in November this year. If he again loses in a big way, it would be a big setback for the progressive agenda - Obama could end up as a one-term president.