HMOs to start ad blitz against Medicare cuts

By Kim Dixon

CHICAGO (Reuters) - Remember Harry and Louise, who helped derail then-First Lady Hillary Clinton's universal health plan a decade ago? Now Sandi, Alvin and Charlotte are making their television debuts.

U.S. health insurers will launch one of their biggest campaigns ever on Thursday to stem the loss of billions of dollars in Medicare payments and they will feature seniors, like Harry and Louise a decade ago, fretting over their benefit coverage.

The deep-pocketed industry is on defense as the U.S. House of Representatives considers slashing $47 billion in payments to private health plans in Medicare, the federal insurance for the elderly and disabled, to help expand a popular children's health program.

Private health insurers' first television advertisement will appear during evening programming and feature a series of seniors worried that cuts to the so-called Medicare Advantage private plans will cost them more and lead to disruption in care.

"The industry has a lot at stake, not just in the short term in terms of profits and margins on these plans, but in terms of a long-term attempt to privatize as much as Medicare as they can," Jonathan Oberlander, associate professor of politics and policy at the University of North Carolina, said.

"This is a very lucrative market for them and it's been booming," he said.

The trade group America's Health Insurance Plans (AHIP), sponsor of the ads and the group behind the Harry and Louise campaign, will consider naming lawmakers for the first time in future ads. It wouldn't say how much it was spending, but called the ads "a very substantial effort."

About 20 percent of the 45 million individuals in Medicare are enrolled in private plans that have become major profit centers for companies like Humana Inc., UnitedHealth Group and HealthSpring Inc..

In the current earnings season, the big private insurers are delivering double-digit profit growth, with tens of billions in revenues industry-wide.

AMMUNITION?

When Humana hiked its 2007 profit forecast for the second time earlier this month, CIBC Markets managed care analyst Carl McDonald said: "We have to wonder if these announcements give House Democrats more ammunition to cut rates."

Analysts believe the proposed $47 billon in cuts will be skimmed during negotiation, but they are predicting cuts of up to $30 billion over five years.

In the ads, seniors named Sandi, Alvin and Charlotte say, "Some people in Congress are talking about cutting Medicare Advantage. Apparently they aren't too concerned about the millions of us who will be forced to pay more for health care."

That claim is misleading, according to Tricia Neuman, director of the Medicare Policy Project at the nonpartisan Kaiser Family Foundation, who has testified before Congress on the issue.

"It's not necessarily the case that people are better off financially if they sign up for Medicare Advantage," she said, noting the plans can charge higher doctor or hospital co-pays.