Obama says insurance companies holding U.S. hostage

By Jeff Mason and Matt Spetalnick

BELGRADE, Montana (Reuters) - U.S. President Barack Obama, pushing for healthcare reform during a trip to the West, said on Friday the country was "held hostage" by insurance companies that deny coverage to sick people.

Obama, on a multi-state swing to tamp down vociferous opposition to his top domestic priority, targeted insurance companies for dropping customers who become sick or forcing patients to cover huge costs.

"We are held hostage at any given moment by health insurance companies that deny coverage or drop coverage or charge fees that people can't afford," Obama told a crowd of some 1,000 people in Montana.

"It's wrong. It's bankrupting families. It's bankrupting businesses. And we are going to fix it when we pass health insurance reform this year," he said.

In a half-work, half-play trip with his family that will include stops at the Grand Canyon and other national parks, Obama, a Democrat, aims to emphasize the benefits of his nearly $1 trillion plan to overhaul the insurance industry, expand healthcare coverage and cut costs to consumers.

Protesters and supporters lined up outside the venue for his first town hall-style meeting in Montana, a traditionally conservative state, but the crowd inside was mostly supportive of the president.

One man challenged Obama on how he would pay for the reform.

"You can't tell us how you're going to pay for this," the man said. "The only way you're going to get that money is raising our taxes ... (and) you said you wouldn't do that."

Obama repeated his promise not to raise taxes on people earning $250,000 or less a year, but he acknowledged that the government would likely end up having to find $30 billion a year to cover the cost of getting coverage to the uninsured.

"You are absolutely right I can't cover another 46 million people for free," Obama said, thanking the man for asking his question respectfully. "We're going to have to find money from somewhere."

CONCERNS

Another questioner, who identified himself as someone who sold health insurance, asked the president why he was vilifying insurance companies.

Obama said some companies had been constructive, citing Aetna as a firm that had worked with the administration on the issue of pre-existing conditions.

Obama has been fighting against Republican criticism that his plan amounts to a government takeover. The issue has sparked emotional and sometimes hostile questioning from citizens at similar question-and-answer sessions with lawmakers across the country.

Obama's town hall meetings in Montana, which supported Republican presidential candidate John McCain in the 2008 election, and Colorado on Saturday will be his second and third such events in less than a week.

They come as poll numbers reflect concern about the U.S. budget deficit. Republicans contend that the plan would be an expensive mistake, especially as the country tries to emerge from the worst financial crisis since the Great Depression.

"People are concerned about several things: one the cost, and number two, they won't have free choice," said Montana Republican Party Chairman Will Deschamps in telephone interview with Reuters.

"This thing is sinking like a rock in a stream," he said.

Screaming demonstrators have disrupted some recent public meetings on healthcare held by members of Congress from Obama's Democratic Party. They captured media attention and overshadowed debate on the plan's complex details.

"The people that make the most noise get the most press," said David O'Connor, 63, a Democrat at the Montana event. "I think we definitely need healthcare reform of some kind." (Additional reporting by Thomas Ferraro; Editing by David Alexander and Eric Beech)