There are increasing signs that two of the hottest hot-button issues in town — health care reform and immigration — are becoming inextricably linked. And that’s bad news for President Barack Obama as he tries to fashion a compromise.

Senator Max Baucus, the Montana Democrat who is leading bipartisan negotiations on health care legislation, on Monday said he would include in his bill a proposal by the Obama White House to bar illegal immigrants from buying health coverage through a new insurance marketplace, or exchange, even if the illegal immigrants were willing and able to pay the full cost.

As Congress’s debate over health-care legislation lumbers toward a defining test for the Obama presidency, partisans on both sides of another issue — immigration — escalated their own proxy war this week, concluding that the fates of the two issues have become politically linked.

Health care and undocumented immigrants is all the rage since Joe Wilson insulted the President last week. Remarkably, Baucus and the White House have responded by seeming to cave.

On Friday I explained how Rep. Joe Wilson’s controversial heckling during President Obama’s joint Congressional address last Wednesday laid bare the ugly-as-ever, Republican illegal immigration wedge strategy for the nation to see. What’s more astounding, I argued, was that key Democrats, Senators Baucus (D-MO) and Conrad (D-ND) to be specific, seemed to be validating Wilson’s outburst. Republicans were scaring up a fake bogeyman – the undocumented immigrant who would benefit from taxpayer funded health insurance – and rather than pushing back with the facts, Baucus and Conrad told the American public to take them seriously.

Few of us, however, have actually bothered to address the issue that provoked Wilson’s outburst: health insurance for illegal immigrants. The line he objected to—”The reforms I’m proposing would not apply to those who are here illegally”—is, in fact, not a “lie.” The current House bill makes it very clear that “individuals who are not lawfully present in the United States” will not be allowed to receive subsidies.