Sebelius piles pressure on insurers

Secretary of Health and Human Services Kathleen Sebelius walks to a microphone stand to speak to reporters following her meeting with health insurance company executives and related industry officials at the White House, March 4, 2010.

WASHINGTON (Reuters) - Health Secretary Kathleen Sebelius ratcheted up the pressure on health insurance companies on Wednesday, urging them to forgo short-term profits to make coverage more affordable and to stop fighting the Obama administration's reform effort.

She told a health insurance industry group that costs and premiums would rise to unsustainable levels and more Americans and businesses would drop coverage if the Democratic-written overhaul of the $2.5 trillion healthcare system were killed.

"We will have a situation where the market is unsustainable," Sebelius said in a speech to a conference sponsored by America's Health Insurance Plans.

In their latest push to get a final healthcare reform bill through Congress, Obama and his fellow Democrats have leveled sharp criticisms at the industry, saying it was putting profits ahead of patients.

Insurers could "give up some of their profits" to make premiums more affordable and work with Congress to enact the legislation, said Sebelius, who added that tens of billions of dollars had been spent on ads and lobbyists to kill the reform push in the past year.

AHIP President Karen Ignagni said the industry would accept Sebelius's challenge to offer more proposals for healthcare cost savings but said the bill did not go far enough in reining in soaring costs.

INSURERS WORRIED ABOUT EXPLODING COSTS

"Our members are very concerned about insurance premiums," Ignagni said, adding the hikes were being driven by "exploding" costs.

"We are very disturbed about what is happening with underlying costs," she said as she introduced Sebelius.

Ignagni later told reporters the proposed legislation in Congress would make the system more expensive, not more affordable.

Health insurer shares, however, were up in early afternoon trading after the Sebelius appearance. The Morgan Stanley Healthcare Payor index rose about 0.6 percent and the S&P Managed Health Care index was up 1.35 percent.

Obama was set to address one aspect of the cost issue in a speech in St. Charles, Missouri, later on Wednesday. The White House said he will back a bipartisan plan to stamp out waste in government-run medical programs for the elderly and needy.

The White House said the new effort to root out improper payments in Medicare and Medicaid could double taxpayer savings to at least $2 billion over the next three years.

"We cannot afford nor should we tolerate this waste of taxpayer dollars," the White House said.

An estimated $54 billion was lost through improper Medicare and Medicaid payments in 2009. Medicare is the government-run program covering elderly Americans and Medicaid is aimed at the poor.

Obama and congressional Democratic leaders face an uphill battle to pass the roughly $1 trillion overhaul that would provide medical coverage to about 31 million Americans who lack healthcare insurance.

Ignagni said the legislation's requirement that people obtain health insurance coverage is not strong enough and would lead to higher premium costs.

Republicans have been united in opposing the bill and have criticized a budget process called "reconciliation" that Democrats plan to use to get a final bill to Obama for his signature.

That process will allow the Democratic majority to pass final legislation by a simple 51-vote majority in the 100-member Senate instead of the 60 votes needed to overcome Republican opposition.

Republicans plan to use the healthcare overhaul effort against Democrats in November congressional elections.

"If they ram this bill through the House like this they lose their majority," said Representative Eric Cantor, the No. 2 Republican in the U.S. House of Representatives. "They do this at their own peril."

(Additional reporting by Jeff Mason, Matt Spetalnick, John Whitesides and Thomas Ferraro; Editing by Eric Walsh and Paul Simao)