Insurers finding less to like as tensions rise on health bill

The industry's chief lobbyist, Karen Ignagni, said yesterday that insurers "can continue to make a major contribution" to the overhaul effort. She told a gathering of the trade group America's Health Insurance Plans: "Yes, we can achieve reform."

But her comments came amid mounting tension between her industry and majority Democrats, and on the heels of months in which President Obama and Democratic leaders have painted insurers as a chief villain.

"They want us where they've put us right now, which is as an enemy," said Steven Champlin, a lobbyist advising the insurance group. Even so, he added, "you have to stay focused on being part of the process and part of the solution."

Some in Washington aren't sure the insurance industry will stay on that path much longer. They argue that what they call Democrats' nonstop attacks make it obvious the industry has already been carved out of the legislative process, unlike the pharmaceutical industry, hospitals, and doctors.

Insurers must decide whether to continue bargaining "or whether they are going to fight in the trenches for what they think is right," said Robert Rusbuldt, president of the independent insurance agents' trade group. "That is not an easy decision. Some scars have been opened on both sides, and you can make an argument that it doesn't make sense to go back to the negotiating table."

Insurers are unhappy because they say the Senate Finance Committee version of the legislation doesn't compel people strongly enough to buy insurance, a key tradeoff for the industry's agreement to sell policies to those who are already sick. It also objects to billions in new taxes on insurers.

The industry released two reports this month saying families' insurance costs would rise under provisions of a health bill drawn up by the Finance Committee. Ignagni's group also aired a TV ad in six states saying older people's benefits under Medicare Advantage, a privately administered form of the program, would be threatened.

Firing back, Democrats have begun pushing legislation through Congress that would erase insurers' federal antitrust exemption. House Speaker Nancy Pelosi said yesterday that she would include the provision in her chamber's health bill.

The industry's rhetoric in Washington is "accommodating," said Ron Pollack, who heads the liberal Families USA. "But outside the Beltway, where substantial resources are being spent, those resources are clearly undermining getting health-care reform this year."

Should the insurance industry opt for a broader attack, it would not take long to launch a TV ad campaign. "I'm sure they have contingency plans," said Evan Tracey of the Campaign Media Analysis Group, which monitors political ads.

Of the $130 million spent this year on TV ads in the health-care fight, $3 million has come from insurance groups, Tracey said. In contrast, he said, $27 million has been spent attacking the insurance industry by labor, progressive, and other groups.

Continuing that theme, several hundred demonstrators marched in front of the hotel where the insurers were meeting, carrying signs saying, "Big Insurance, Sick of It."

Scott Styles, the insurance group's senior vice president for federal lobbying, said that, if needed, the insurance association could team with other business organizations like the U.S. Chamber of Commerce, which has criticized many aspects of Democrats' health effort and has several insurance firms as members.

But it will likely be harder for the industry to find business allies this year than it was in 1993 and 1994, when the insurers - allied with other health-care providers and business groups - helped kill President Bill Clinton's health-care effort.