Obama to Post Health Plan as Sebelius Renews Attack on Insurers

By James Rowley and Nicole Gaouette

Feb. 19 (Bloomberg) — President Barack Obama is preparing to release a proposal to restart the health-care debate before a White House meeting next week as the administration signaled that insurance company practices will be a focus of the talks.

Obama will offer “one proposal” that takes “some of the best ideas” from House and Senate bills “and put them into a framework moving forward,” Health and Human Services Secretary Kathleen Sebelius said yesterday. A senior White House official said the plan will be posted by the morning of Feb. 22.

Obama invited Republican leaders to the Feb. 25 meeting and challenged them to present their own health-care plan.

Democrats in Congress are still reconciling differences between versions of legislation passed last year by the House and Senate that’s aimed at expanding coverage to millions of uninsured Americans while curbing costs. House Democrats say that while the two chambers are close to an agreement, they may not have a unified plan in time for the televised meeting.

“I don’t know whether the president is going to put one particular piece of legislation on the table,” Representative Chris Van Hollen of Maryland told reporters during a Feb. 17 conference call.

Jim Manley, a spokesman for Senate Democratic Leader Harry Reid, also declined to say whether there would be an agreement among Democrats before the meeting.

Attacking Insurers

The Obama administration, meanwhile, renewed its criticism of insurers yesterday, with Sebelius releasing a report highlighting 2009 premium increases that she said “are five to 10 times larger than the growth rate in national health expenditures.” The report also focused on 2009 profits and executive pay at U.S. insurers such as WellPoint Inc.

It follows her inquiry into Indianapolis-based WellPoint’s proposed 39 percent rise in premiums for Californians who buy their own insurance. WellPoint has been called to testify before Congress about the increase.

Sebelius said during a news conference that insurance company profits are “way over anybody’s estimates.” She said the five largest U.S. insurers took in combined profits of $12.2 billion in 2009, 56 percent higher than in 2008. “They’re also companies where the top executives are paid up to $24 million each,” she said.

‘Politics of Vilification’

Insurers said they are being scapegoated. “It’s time to stop the politics of vilification,” Karen Ignagni, president of America’s Health Insurance Plans, said in a statement.

Ignagni attributed rising costs in the individual market to “the urgent need to reduce the growth of underlying medical costs and to bring everyone into the system.”

WellPoint executives said unexpectedly high costs made the California premium increase necessary. “Premiums were insufficient to cover the higher costs,” Brian Sassi, head of WellPoint’s consumer business unit, said in an interview yesterday.

Bradley Fluegel, the company’s chief strategy officer, said the increase wasn’t making up for money lost in 2009. “We’ve already lost that money,” he said. “We just have to reflect on a go-forward basis the higher costs.”

Shares of WellPoint, the biggest U.S. insurer of individuals and small businesses, have dropped 11 percent over the past month. It’s been the worst performer over that time in the six-member Standard & Poor’s 500 Managed-Care Index, which has fallen 6.7 percent.

Expanding Insurance

The attack on the insurers may be a theme White House officials will stress at next week’s summit.

Both the House and Senate bills would place new limits on insurers, barring them from rejecting clients because of a pre- existing condition. They would also require all Americans to get insurance or pay a penalty, offering government aid and creating online exchanges where individuals and small businesses could shop for insurance.

A compromise bill was set to pass both chambers when Democrats lost a special Senate election in Massachusetts that cost them the 60th seat they needed to overcome Republican efforts to block passage. Faced with the impasse, Obama invited Republicans to sit down with Democrats at the Feb. 25 meeting to discuss ways forward.

Van Hollen, a member of House Speaker Nancy Pelosi’s leadership team, said Obama would use the forum “to get a sense of what our Republican colleagues’ objectives are” and “work to try to include those ideas.”

Mike Steel, a spokesman for House Republican Leader John Boehner of Ohio, said if Democrats want bipartisan cooperation they must understand it “means a clean sheet of paper, not an infomercial for another Democratic backroom deal.”

Reconciliation Option

Should the Democrats be unable to gain any Republican support, one avenue open to them is using a budget process known as reconciliation that would require only a simple majority of 51 votes in the Senate. Still, that would force them to slim down the bill because it must be limited to spending and tax issues.

Another alternative is for the House to try to pass the bill the Senate approved on Christmas Eve along with a reconciliation measure that would include some of the provisions favored by the House such as more generous subsidies to help people buy insurance and greater aid to the elderly in purchasing medication.

To contact the reporter on this story: James Rowley in Washington at jarowley@bloomberg.net or Nicole Gaouette in Washington at at ngaouette@bloomberg.net

Last Updated: February 19, 2010 00:01 EST

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