MIAMI, FLORIDA -- Española   PDF -- President Barack Obama squared off with the insurance lobby over industry charges that a government health plan he backs would dismantle the employer coverage Americans have relied on for a half-century and overtake the system.

The harsh exchange came after months of polite White House photo-ops at which the administration and insurers emphasized their search for common ground. It happened just when Congress seems to be floundering in its attempt to move sweeping legislation embodying Obama's top domestic priority, although leading lawmakers say they remain confident.

"If private insurers say that the marketplace provides the best quality health care ... then why is it that the government, which they say can't run anything, suddenly is going to drive them out of business?" Obama said in response to a question at a White House news conference.

"That's not logical," he scoffed, responding to an industry warning that government competition would destabilize the employer system that now covers more than 160 million people.

At issue is whether to set up a government-sponsored health insurance plan that would compete with private companies. Individuals and small businesses would get to pick either the public plan or a private one through a new kind of insurance purchasing pool called an exchange. Eventually, the exchanges could be opened to large companies as well.

"The public plan, I think, is an important tool to discipline insurance companies," Obama said. That's not what the industry thinks. In a letter to senators released Tuesday, the two largest industry groups warned in stark terms that a government plan would take over the system.

America's Health Insurance Plans and the Blue Cross Blue Shield Association also said they don't believe it's possible to design a government plan that can compete fairly with private companies in a revamped health care market. That particular statement seemed to be aimed at lawmakers of both parties who continue to seek a compromise on the contentious issue.

INSURANCE COMPANIES SAY: "We do not believe that it is possible to create a government plan that could operate on a level playing field," an insurers' letter, signed by AHIP head Karen Ignagni and Scott Serota, the Blue Cross CEO. They continued: "Regardless of how it is initially structured, a government plan would use its built-in advantages to take over the health insurance market."

The industry suggested a government plan would run counter to Obama's promise that Americans can keep the coverage they have.

"A government-run plan no matter how it is initially structured would dismantle employer-based coverage, significantly increase costs for those who remain in private coverage, and add additional liabilities to the federal budget," said the letter.

Nonetheless, recent media polls have found strong public support for the idea. That has emboldened liberals, who are arguing that Democrats shouldn't compromise on a government plan. But moderate Democrats in the Senate are trying to get Republican support for nonprofit co-ops as an alternative.

Without a compromise, there's probably no chance of significant Republican backing for Obama's plan to slow increases in health care costs and expand coverage to the nearly 50 million uninsured.

Obama said he understood the legitimate concerns of insurers that private plans wouldn't be able to compete with "the government just printing money." The proposals lawmakers are debating would provide government money for start-up costs, but then require the government plan to be financed through premiums.

Insurers say the government can protect consumers through stiffer regulation.

"If we have comprehensive reform of market rules, then it would not be necessary to have any form of public plan, including co-ops," said Robert Zirkelbach, a spokesman for the industry.

On Capitol Hill, House Democrats pushed forward with a partisan health care bill. Meanwhile, key Senate Democrats were still laboring to achieve an elusive bipartisan compromise.

Finance Committee Chairman Max Baucus, D-Mont., said senators are getting closer to their goal of holding the cost of the legislation to $1 trillion over 10 years. Although that's a huge sum, it would represent about 3 percent of the $35 trillion the United States is already expected to spend on health care over the same period.

"We're a lot closer," said Baucus after a meeting with a small group of senators from both parties that has been dubbed "the coalition of the willing." "We'll make it."

Of the five House and Senate committees working on health care, Finance is the only one that appears to have a chance at a bipartisan agreement.

Obama Health Insurance Plan

"Health insurance reform is not a luxury that can be postponed, but a necessity that cannot wait... Barack Obama (5/09)."

President Barack Obama says "the health care industry's promise to cut $2 trillion in costs over 10 years as 'a watershed event' in the long search for a solution to the millions of uninsured." The president continues, "I will not rest until the dream of health care reform is achieved in the United States of America," Obama spoke at the White House's State Dining Room and announced the voluntary offer made to the White House Monday by a consortium of hospitals, insurance companies, drug makers and doctors.

That health consortium told the President, that they would slow rate increases by 1.5 percentage points a year by "improving coordination, focusing on efficiency and embracing better technology and regulatory reform." Government economists say the shaved costs would create breathing room to help provide health insurance to an estimated 50 million Americans who now do not have it.

Health insurance broker, Morgan Moran said, "It's a substantial change from the time in the early 1990s when President Bill Clinton took on health care reform, only to see industry leaders fight back hard, ultimately killing the White House proposal before it could gain any traction; this time the industry seems to be playing ball." Obama believes this may lead toward universal health care coverage for all Americans. He said the country "can, will and must" accomplish this goal by the end of the year.

While speaking about health insurance, Obama indirectly criticized some of the consortium groups at his side for killing the effort last time around. The president reminded the crowd, "All too often, efforts at reform have fallen victim to special interest lobbying aimed at keeping things the way they are, to political point-scoring that sees health care not as a moral issue or an economic issue, but as a wedge issue, and to a failure on all sides to come together on behalf of the American people," the president said.

Florida health insurance broker, Morgan Moran believes the offer from the industry groups "does not resolve the tough details of the new health care system, but it does offer the prospect of freeing a large chunk of money to help pay for coverage." And it puts the private-sector groups in a good position to influence the bill Congress is writing.

Moran said, "The health industry groups are trying to get on Obama's bandwagon for expanded health coverage now in the hope they can steer Congress away from legislation that would restrict their profitability in future years.

SECRETS:

Behind closed doors, insurance companies say they "want to avoid the creation of a government health plan that would directly compete with them and enroll middle-class workers and their families." The drug makers are worried because in the future, new medications might have to pass a cost-benefit test before they can win approval. And hospitals and doctors are concerned the government could dictate how much they get paid to care for any patient, not only the elderly and the poor.

The estimated federal costs for the Obama health insurance plan range from $1.2 trillion to $1.5 trillion over 10 years, and so far Obama has only spelled out how to get about half of that. More -- Española

COBRA Insurance Can Help Unemployed

en Española -- Individuals who lost their jobs in the last several months may be eligible for employer-sponsored health insurance coverage at greatly reduced rates.

The federal government will pay 65% of Cobra continuation coverage premiums as part of the American Recovery and Reinvestment Act of 2009, which was signed into law on Feb. 17. The coverage will apply to individuals who lost or lose their jobs between Sept. 1, 2008 and Dec. 31, 2009 and are eligible for continuing coverage under Cobra, a federal law called the Consolidated Omnibus Budget Reconciliation Act.

The new subsidy "makes Cobra much more affordable for a lot of people," says Scott Keyes, a senior health-care consultant at Watson Wyatt, a consulting firm. He expects participation could double or triple.

The new subsidy would last up to nine months for individuals who are not eligible for other insurance such as Medicare or a spouse's plan. It applies to employees, their spouses and any children who lost health coverage because of an involuntary termination.

Participants also can't earn more than $125,000 in the year they receive the subsidy if they are single or more than $250,000 for couples who file jointly.

Laid-off workers already can extend their job-related health coverage for up to 18 months under Cobra. The law applies to companies with 20 or more workers, which continue to offer a group health plan.

"I think this is aimed at helping people stay insured," says Amy Bergner, a principal at Mercer, a consulting firm in Washington.

She says employees who didn't elect Cobra coverage initially now have a second chance to sign up. -- read more

Compromise on Health Care

Democrats are seeking a compromise on a bigger government role in insurance coverage as part of President Barack Obama's proposed health care overhaul.

At issue is whether middle-class workers and families should have the option of a government-sponsored plan that would compete with private insurers. Obama and other Democrats support the idea, which Republicans adamantly oppose.

Sen. Charles Schumer, who is working on the issue for the Senate Finance Committee, said Thursday one potential compromise is based on insurance plans that most states already offer their employees. Obama's health secretary nominee, Kansas Gov. Kathleen Sebelius, likes the idea.

Schumer, D-N.Y., said such a plan would avoid expanding a federal program like Medicare and that a private insurer possibly could run it. Sebelius already administers that type of plan in Kansas.

At a Senate hearing, Sebelius noted that more than 30 states "have a public plan side by side with private market plans in our state employee programs." State workers, she said, "have an opportunity to take a look at which is best suited to themselves and their families. And there has been no destruction of the marketplace."

The insurance lobby fears that a federally backed plan could drive companies out of business. "We are taking a look at the different state employee plans to get a better understanding of how they operate," said Robert Zirkelbach, a spokesman for (AHIP) America's Health Insurance Plans.

GOP lawmakers "are going to need to know what's in the fine print," said Craig Orfield, a spokesman for Sen. Mike Enzi, R-Wyo., a leading lawmaker in the debate.

The issue of a public plan is a major stumbling block in deciding how to rein in health costs and cover the uninsured. "My goal is to find a plan that would be acceptable to large numbers of senators," Schumer said in an interview. "Right now, the private insurers are totally opposed, but maybe there's room." A public plan could serve broader goals, he said, by pioneering innovations that profit-driven companies might be slow to adopt because of costs.

The state employee plans Schumer is looking at are similar to how big companies insure their workers. Companies budget each year for health expenses, then hire an insurer to process claims, negotiate rates with doctors and hospitals and cajole employees to follow healthier lifestyles. -- read more

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