Insurers in crosshairs of health reformers

By Susan Heavey - Analysis

WASHINGTON (Reuters) - The debate over reforming the U.S. healthcare system has zeroed in on one main target: insurance companies.

Democrats and the Obama administration plan to spend August battling to win popular support to expand healthcare coverage as the insurance industry mobilizes an advertising campaign to criticize the cost and scope of a major overhaul. Insurance companies have become the bull's eye for reform advocates looking for a target for ballooning U.S. healthcare costs.

"Every great legislative debate needs a villain and it was only a matter of time before the debate grew so intense that insurers were highlighted as the enemy," said Paul Heldman, an analyst with Potomac Research Group.

The fight could ultimately decide if President Barack Obama makes good on his pledge to expand healthcare coverage to about 46 million Americans now lacking it.

Democrats are pointing directly at insurers, with Obama discussing "health insurance reform" rather than simply health reform. House of Representatives Speaker Nancy Pelosi recently ratcheted up the debate, calling insurers "almost immoral" and "villains."

If one asks "the public, the medical community, the Congress (who are) the No. 1 people who mess up the healthcare system, they'll tell you: the insurance companies," Sen. John Rockefeller, a West Virginia Democrat, told Reuters. People are "being taken advantage of. That's not all insurance companies, but insurance companies as a whole. That's what they do."

A Quinnipiac poll last month found 69 percent of U.S. voters back government-run insurance even though most people who already have coverage said they were at least somewhat satisfied with it.

Several Democratic-written proposals call for changes that could impact the industry, including a government-run public option that Obama has said is needed to "keep the insurance companies honest." Insurers could also see taxes slapped on deluxe plans sold to corporate executives and cuts to private Medicare plans known as Medicare Advantage.

Senate Democrats, working with the White House, have secured cost-cutting deals with hospitals and drugmakers. But hope of an agreement with insurers has faded.

"A campaign has been launched to demonize health plans," Karen Ignagni, chief executive of America's Health Insurance Plans, told reporters.

"The same old Washington politics of 'find an enemy and go to war' is a major step backward, not a step forward," said Ignagni.

Her group represents Aetna Inc (AET.N), WellPoint Inc (WLP.N), Cigna Corp (CI.N), UnitedHealth Group Inc (UNH.N) and others.

The insurance group has launched a national cable television advertising campaign in August, but a spokesman declined to say how much it plans to spend.

LONGING FOR BUSH ERA

The political brawl is a far cry from the recent Bush administration, when Republicans looked to insurance companies to help provide health care at lower costs.