In reality Berwick is a casualty of the ongoing partisan fight over social insurance. Nominally this is the fight over "deficits" and "debt", but much more accurately it's a dispute about the nature of key safety net programs like Medicare, Medicaid, and, soon, the new health care law. The irony is that Berwick is best known, and widely respected, for his academic work on making the U.S. health care system more efficient -- i.e. how to save people, businesses, and the government money, and simultaneously improve patient care. If the continuing fight over deficits was really about deficits, Berwick would have broad, bipartisan support to continue his work. Instead his curtailed tenure serves as an illustration of the fact that the fight about budget deficits doesn't really have anything to do with deficits at all.
One of the remarks that got Berwick in trouble with the right came in a 2009 interview when he said, "The decision is not whether or not we will ration care -- the decision is whether we will ration with our eyes open. And right now, we are doing it blindly."
Berwick was talking about comparative effectiveness research -- the science of determining which treatments and procedures work best, and a practice Republicans have decried as government rationing. It was one aspect of the right's unhinged attack on "death panels," but it's the key to sucking huge amount of waste out of the health care system. Berwick, like most liberals and Democrats, is of the school of thought that the system can be made much more efficient before it becomes necessary to roll back government increasingly expensive programs like Medicare and Medicaid.
He's almost certainly correct in theory (setting aside the horribly complicated politics). And if he and Democratic administrations are able to make good on this notion, it means Medicare and Medicaid costs can be reigned in, the programs can be made affordable in the long-term, and the conservative goal of unwinding those programs will lose all budgetary valence.
That's why conservatives rejected Berwick's nomination. He wanted to prove that the government does a better job financing health care -- at least for the poor and elderly -- than private insurance companies. The implication, if he'd succeeded, would have devastated the right's campaign against the centerpiece of the Great Society. That's why he had to go.
Obama swiftly nominated Berwick's deputy, Marilyn Tavenner, to fill the vacancy. The question now is whether the GOP will use the same tactics to kneecap her, too.