Obama Criticizes Insurers in Bid to Sell Health Plan (Update2)

By Kristin Jensen and Alex Nussbaum
Bloomberg News
March 9, 2010

March 9 (Bloomberg) -- President Barack Obama and his top health official are stepping up attacks on the nation's insurers in an effort to sway public opinion and persuade lawmakers to back U.S. health-care legislation.

Obama told an audience outside Philadelphia yesterday that insurers have calculated that higher premiums can more than make up for the loss of customers who can't afford coverage. Health and Human Services Secretary Kathleen Sebelius highlighted her call to insurers to post information justifying their rates.

"We can't have a system that works better for the insurance companies than it does for the American people," Obama said at Arcadia University in Glenside, Pennsylvania. The status quo, he said, is "unsustainable."

White House officials are trying to rally public support for the biggest changes to U.S. health care in 45 years. The effort was on the brink of failure just a few weeks ago and faces opposition from Republicans and some Democrats.

Pennsylvania Senator

Arlen Specter, a Democrat who traveled with Obama, said the speech was the "most fiery" he's seen Obama since the early days of the 2008 presidential campaign.

"When I was listening to him I wished that he had given that in the State of the Union," Specter said. "He would have reached a lot more people."

'Keep Doing This'

Obama cited a plan by WellPoint Inc. for a 39 percent rate increase for some policyholders in California. Both he and Sebelius also referred to a conference call held by New York- based Goldman Sachs Group Inc. in which an executive from the London-based insurance broker Willis Group Holdings Plc said price competition has decreased and insurers are willing to "walk away" from clients.

"They will keep on doing this for as long as they can get away with it," Obama said. "So how much higher do premiums have to rise until we do something about it?"

Sebelius wrote to UnitedHealth Group Inc., WellPoint, Aetna Inc. and Cigna Corp. yesterday, reiterating a request that they disclose how much of premiums go toward customers' medical care, as well as administrative costs, executive salaries and profit.

"Having a bright light shining on what's happening in the country helps at a minimum to discourage some of the practices that we're seeing," Sebelius told reporters on a conference call.

Waiting for Details

The companies' chief executive officers met with Sebelius March 4 at the White House. Stephen Hemsley, CEO at Minnetonka, Minnesota-based UnitedHealth, said in an interview afterward that the industry agreed on the need for transparency and was waiting for details from the administration.

The Washington trade group, America's Health Insurance Plans, said Obama needs to focus more on ways to reduce medical costs and less on attacking insurers.

"Our industry strongly supports health-care reform because we recognize that the current system is unsustainable," Karen Ignagni, president and CEO of the trade association, said in remarks prepared for delivery at the group's national policy forum today. "Unfortunately, the path that has been followed is one of vilification rather than problem-solving."

The meeting at a Ritz-Carlton hotel in Washington was targeted by demonstrators pressing for passage of the overhaul legislation. A group of protesters entered the hotel and left citizens' arrest warrants with police after failing to get face- to-face meetings with Ignagni and company executives.

Obama's Plan

The insurance industry is also helping sponsor a new advertisement designed to pressure lawmakers to vote against the Democratic plan. A coalition of 248 associations led by the U.S. Chamber of Commerce plans to spend as much as $10 million on the campaign, running on national cable and in 17 states.

"We don't believe Washington got the message, so we're calling on viewers to tell Congress to stop this bill," Bruce Josten, the Chamber's top lobbyist, told reporters today.

Obama's plan, designed to cover 31 million uninsured people while curbing medical costs, gives the government new power to regulate rate increases. Insurers such as Indianapolis-based WellPoint would also be required to accept all clients, even those with preexisting conditions.

All Americans would be required to get insurance, with new purchasing exchanges and subsidies to help people buy coverage.

Reconciliation Bill

Obama is pressing House Democrats to approve a bill that has already passed the Senate. Changes then would be made to the legislation using a tactic known as reconciliation, which would require a simple majority of votes in the Democratic-controlled Senate.

White House spokesman Robert Gibbs said today he still expects the House to pass the Senate bill by March 18.

The task is complicated by concerns some Democrats have about the bill's provisions. Also, polls show more than half of Americans oppose the Democrats' plans.

"It's hard for some members of Congress to make this vote," Obama said yesterday. Still, he said, "Those of us in public office were not sent to Washington to do what's easy."

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