Obama defends healthcare plans, criticizes insurers

GRAND JUNCTION, Colorado (Reuters) - U.S. President Barack Obama reignited his criticism of health insurance companies on Saturday, promising reforms that would prevent firms from capping coverage or charging "outrageous" fees.

Traveling to a conservative area of Colorado, a western state that supported Obama in the 2008 election, the president continued his assault on companies that the White House has painted as being at the root of the country's healthcare woes while defending his proposals to fix the system.

"Insurance companies will no longer be able to ... place an arbitrary cap on the amount of coverage you can receive or charge outrageous out-of-pocket expenses on top of your premiums," Obama told the crowd of roughly 1,500 people.

"No one in America should go broke because they get sick," he said to loud applause.

The town hall style meeting -- the third this week for Obama, whose public poll numbers are dipping as Americans worry about his expensive plans to reform the healthcare industry -- grouped supporters and critics in a mostly civil, friendly atmosphere.

One university student challenged Obama to explain more clearly how private insurers would be able to compete against a public entity with government backing, which Obama supports.

"The notion that somehow just by having a public option you have the entire private marketplace destroyed is just not borne out by the facts," Obama said, adding the proposed non-profit entity would also have to compete for favorable interest rates and collect premiums to be competitive.

Protesters and supporters lined up outside the school where the event took place, replaying scenes from other healthcare events across the country.

Signs held by some of the protesters included "Obama care - chains you can believe in" -- a play on the "Change you can believe in" theme of Obama's presidential campaign -- and "Say No to government-run health care."

Charles Van Rickley, 28, a firefighter and a Republican who attended the event, said Obama's argument was not convincing.

"This seems like a perfect step to try and push private insurance companies out of business," he told Reuters.

BETTER FOR THE DEFICIT

Obama, a Democrat, has stepped up his attacks on insurance companies in recent days. On Friday, he told a town hall event in Montana that insurance firms were holding the country hostage. In his weekly radio address Obama said U.S. healthcare worked better for insurance companies than for patients.

At the Colorado event he encouraged listeners not to focus only on the public option controversy, which even some lawmakers in his own party oppose.

"The public option, whether we have it or we don't have it, is not the entirety of healthcare reform," he said.

"This is just one sliver of it, one aspect of it. And by the way, it's both the right and the left that have become so fixated on this that they forget everything else."

Republicans and some Democrats have also raised concerns about the cost of the nearly $1 trillion overhaul to extend coverage to millions of uninsured Americans. Obama says he will not raise taxes on Americans making $250,000 a year or less in order to pay for the overhaul.

Responding to critics who were concerned about the country's skyrocketing budget deficit, Obama cited the financial burden healthcare puts on the federal government, with its health programs for the poor and elderly.

"I hear a lot of people say, 'How can we afford this right now? We've got to reduce our deficit,'" he said, taking boos from some audience members when he said he inherited a $1.3 trillion deficit from the previous administration of Republican George W. Bush.

"If you are a deficit hawk and you are tired of this crazy spending in Washington, and you want to finally make sure that we are looking out for the next generation, then you more than anybody should want to reform the healthcare system," he said.

(Editing by Vicki Allen)