Though it was a terrible moment politically for McCain when he mocked Obama for supporting a health exception to a late term abortion ban, the Republican actually has a substantive point. The “health” exception has in the past been used to keep almost all third trimester abortions legal.
It’s often forgotten that Roe v. Wade allows states to ban abortion in the third trimester. Specifically, it could “regulate, and even proscribe, abortion except where it is necessary, in appropriate medical judgment, for the preservation of the life or health of the mother.”
It was the companion decision to Roe called Doe v. Bolten that then gave “health” such a broad defintition that subsequent courts have, in effect, legalized most third trimester abortion:

“[M]edical judgment may be exercised in the light of all factors – physical, emotional, psychological, familial, and the woman’s age – relevant to the wellbeing of the patient. All these factors may relate to health.”

So, substantively, it was not at all absurd for McCain to suggest that supporting a late term abortion ban with a health exception, as Obama said, may not mean anything at all.
Ironically, Obama might secretly agree with McCain’s point, at least in part. Earlier in the campaign he seemed to indicate that he frowned upon the health exception being stretched to include too many abortion. “I don’t think that ‘mental distress’ qualifies as the health of the mother,” he told Relevant magazine. “I think it has to be a serious physical issue that arises in pregnancy, where there are real, significant problems to the mother carrying that child to term… ”
After pro-choice groups complained, Obama quickly clarified that he meant:

“In the past there has been some fear on the part of people who, not only people who are anti-abortion, but people who may be in the middle, that that means that if a woman just doesn’t feel good then that is an exception. That’s never been the case.
“I don’t think that is how it has been interpreted. My only point is that in an area like partial-birth abortion having a mental, having a health exception can be defined rigorously. It can be defined through physical health, It can be defined by serious clinical mental-health diseases. It is not just a matter of feeling blue. I don’t think that’s how pro-choice folks have interpreted it. I don’t think that’s how the courts have interpreted it and I think that’s important to emphasize and understand.”

So it now remains an open question: what exactly does Obama mean by “defined rigorously”?
P.s. John McCain attacked Barack Obama for allowing infants to die by opposing the Born Alive bill in Illinois. Obama said that’s not true. My take on who’s right on the “born alive” issue.