Public Enemy No. 1: Health Insurers

Now that healthcare reform seems in serious danger of a crash upon the shores of political reality, the Obama administration is pulling out as many stops as it can to achieve its vision of healthcare reform.

Forget shared sacrifice. Forget the kum-ba-yah meetings of industry stakeholders at the White House that marked the beginning of the year and the beginning of a new administration. Several months later, the mood has changed. A president sees his popularity slipping and his chance to declare a marquee victory slipping away.

In the face of strong opposition seen by members of Congress as they visit their home areas, the president and his team seem to have decided that the political winds are blowing back toward the status quo. In order to salvage the reform initiative, there is one villain left that may help the president get his initiative back on track and give Congress some political cover: health insurers.

It's a potentially brilliant tactical move to identify a villain, tapping into that reservoir of hate much of the electorate has for health plans. It's also convenient. Just two days ago, the Department of Health and Human Services published a vicious critique of private insurers in the hope of tarring that group sufficiently that support swings back in favor of a public health plan option.

So this is what it's come to: strong-arming.

I suppose the lesson is shame on health plans, as an industry, for not making a deal with the Obama administration, as the drug industry did. According to spokesman Billy Tauzin, the Pharmaceutical Manufacturers Association of America has a deal with the administration that it won't be asked to save any more than $80 billion over 10 years in any healthcare reform package.

This is how any progress is made against an entrenched industry, especially a domestic industry as large and important as healthcare—an industry that the voters only seem to want more of—as long as they don't have to pay for it. Lobbyists get involved. They strike backroom deals with lawmakers and other politicians in return for agreeing not to oppose legislation. Often, one segment gets left out in the cold. This time, it appears to be health insurers, who are the public face of heretofore halfhearted attempts to control healthcare's spiraling costs. Divide and conquer. It's like musical chairs, and health insurers didn't get a seat. The whole effort smacks of heavy-handedness and bullying, but it has a good chance of success.

I'm not defending health insurers. To a large extent, they are sleeping in a bed that they've made. Retrospective denials of coverage, dropping patients when they become too expensive, and other high-profile, borderline unethical activities that seem to put profit well ahead of patient welfare haven't helped. Not to mention that insurance company chief executives have enriched themselves grossly, to the apparent detriment of some patients. These activities have left health insurers more hated than just about any group besides perhaps lawyers. Did I mention most members of Congress are lawyers? But I digress.

In tarring one industry though, often the nuances get lost. Health insurers for years have only been responding to demands by employers—the ultimate payers in healthcare—to cut costs. Many hospitals and health systems, until recently, haven't done much to demonstrate that they're providing value in the equation either.

But this is what happens when you start playing to the lowest common denominator in the face of complicated problems. Health insurers = bad. Other segments appear to have gotten lucky—this time.

I'm simply suggesting that demonizing one segment of an industry and smacking it down with a public option isn't going to solve the problem. Drug companies got a cheap way out this time.

But watch out hospitals. You might be next. The opening bid, apparently, is $155 billion over 10 years.