- The Washington Times - Wednesday, August 5, 2009

President Obama and congressional Democrats are crafting an image of health insurance companies as the industry villain, a growing chorus that insurers are trying to fight as the reform debate goes public.

“For a country that is trying to accomplish what it has failed to do for a century — pass health care reform — the same old Washington politics of ‘find an enemy and go to war’ is a major step backward, not a step forward,” said Karen Ignagni, president and chief executive officer of America’s Health Insurance Plans (AHIP), an industry trade group.

She said the growing anti-insurance rhetoric is a reflection of Americans’ doubts about the public option, the government health insurance program proposed by Democrats.

The public option has been a divisive issue even among Democrats. The Progressive Caucus sent a letter to House Speaker Nancy Pelosi on Tuesday reinforcing its message that it will only support a reform bill that includes a “robust” public option, pitting it against conservative Blue Dogs who altered the public plan in a deal crafted with House leaders last week.

The reform debate is going directly to the public this month, as lawmakers head home to their districts to host town hall meetings and gatherings, with some characterizing the industry as profit-seekers who are holding up reform plans.

“Insurance companies are out there in full force carpet-bombing, shock and awe, against a public option; so much so that when you ask people about the plan, they are uncertain about it until you tell them what is in it,” Mrs. Pelosi said last week,calling the industry “villains.”

The insurance industry is opposed to the public option, but the plan is widely supported by Democrats who say it is necessary to create new competition with insurance companies and drive down costs.

Insurers, in a claim echoed by congressional Republicans, argue that any government plan would set provider reimbursement rates too low to keep competing private insurers in business. They point to existing government programs, such as Medicare and Medicaid, which doctors and other providers say don’t fully cover their costs. But the nonpartisan Congressional Budget Office said in a recent report that the public plan wouldn’t crowd out private insurers.

The industry also favors a requirement that all individuals carry insurance, which would provide it with more than 40 million new customers.

Other proposals have been put forward that would tax insurance companies who offer the most elite plans, which proponents argue drive up unnecessary costs.

The shift against the insurance companies in the reform debate can even be found in its name. In the early days of the reform debate, it was called “health care reform,” but about a month ago Democrats began using the phrase “health insurance reform.”

Now insurers are trying to take their campaign public. AHIP began a seven-figure television advertising campaign last month encouraging a bipartisan reform plan that encourages coverage for all people.

The National Association of Health Underwriters later called Mrs. Pelosi’s comments “petty name-calling.”

“We all have a stake in achieving meaningful reform that both preserves Americans’ freedom to choose their doctors and lowers long-term health care costs,” said Janet Trautwein, CEO of the trade group of insurance agents and brokers. “A public option will accomplish neither.”

Some of the anger with insurance companies has centered around its profits. Lawmakers say in order to provide health care coverage to all, each sector in the health field has to take a cut. Over the past eight years, profits at the top 10 health insurers rose 428 percent, said Sen. Charles E. Schumer, citing data from advocacy group Health Care for America Now.

Mr. Schumer, New York Democrat, issued a call last month demanding health insurers agree to cost cutting measures, similar to the deals the Senate Finance Committee and White House arranged with drug makers and hospitals.

“Our broken health care system is working all too well for many private health insurers,” he said. “They need to become a better partner as we work to enact a health care reform bill without adding to the deficit.”

The industry responded by saying it was the first to suggest policy changes, such as an end to denials based on pre-existing conditions.

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