First Lady Calls Health Insurers’ Ads ‘Great Lies’

WASHINGTON —  In one of the sharpest Administration attacks so far in the battle over health care reform, First Lady Hillary Rodham Clinton lashed out at the insurance industry Monday, accusing industry-financed advertisements of telling “great lies” about the White House plan.

Insurance companies “like being able to exclude people from coverage because the more they can exclude, the more money they can make,” Mrs. Clinton charged in a speech to some 2,000 pediatricians gathered for a conference here.

The insurance industry “has brought us to the brink of bankruptcy because of the way that they have financed health care,” she told the pediatricians, who received her warmly and interrupted her frequently with applause. “It is time for you and for every American to stand up and say to the insurance industry: ‘Enough is enough. We want our health care system back.’ ”

The sharply escalated rhetoric seems designed to cast the insurance companies in the role of the evil adversary trying to hold back reform--a role that Administration strategists have been anxious to fill as they seek to mobilize their forces and gear up supporters for a campaign that has lost some steam in recent weeks.

The Administration is “trying to paint us as the black hat to somehow help their cause,” said Charles N. Kahn III, executive vice president of the Health Insurance Assn. of America.

Administration officials already have succeeded in splitting the insurance lobby--getting several of the nation’s largest insurers to work with them while smaller companies lead the fight against the Administration’s proposals. Kahn’s group represents 271 companies that together hold about 35% of the health insurance market. Many of those small- and medium-sized firms would be forced out of the health care business under the Administration’s plan.

Most of the smaller insurance companies limit their markets, declining to insure people who already have serious health problems, for example, or charging certain customers far more than others. Under the Administration’s plan, insurers would have to take everyone, charging a single community rate.

The divisions within the insurance industry are only one example of what President and Mrs. Clinton have sought to do, following a classic political technique of dividing the opposition as they seek to sell their plan.

Another example has come with the Administration’s approach to Republicans. Both Clintons have lavishly praised Sen. John H. Chafee (R-R.I.), who has proposed a plan, co-sponsored by several other GOP senators, that is close to the Administration’s in many respects. But Administration aides and supporters have sharply attacked another plan, sponsored by Sen. Phil Gramm (R-Tex.), that takes a far more conservative approach.

Monday, as Mrs. Clinton attacked the insurers, David C. Wilhelm, the Democratic Party chairman, attacked Gramm, calling his plan “a sham.”

“Sen. Gramm’s plan is, frankly, irresponsible and in many ways makes a mockery of the hopes and needs of the American people,” Wilhelm said.

Gramm’s plan would offer tax-free savings accounts--similar to individual retirement accounts--that individuals could use for health care. People who did not spend all the money in their accounts could keep it, tax free. Democrats have attacked Gramm’s plan, noting that it would be of greatest benefit to those with high taxes and of little benefit to the working poor, who often do not owe any income taxes. Moreover, Wilhelm noted, Gramm’s plan would encourage people to save money by deferring preventive care--a step that could be costly to society in the long run.

“This approach actually encourages people to make bad health care decisions--to put off regular checkups and only seek treatment in crisis situations,” Wilhelm said.

The insurance industry advertisements Mrs. Clinton attacked have been run, so far mostly on cable stations, by the Coalition for Health Insurance Choices, a group created by the industry that has spent roughly $6 million on advertisements against the Clinton plan. The advertisements portray a couple sitting at a table at home talking about their health insurance.

The first ad asserts that the Clinton plan would require people “to pick from a few health care plans designed by government bureaucrats.” That claim is not true--the Clinton plan would allow private companies to design health care plans and would give all workers the choice of a traditional “fee for service” plan.

Industry officials now claim that their advertisements, aired earlier this fall, dissuaded Clinton from proposing a plan that might have limited choice more drastically. Administration officials deny that, saying that their plan never contemplated having government officials “design” health care plans.

A second advertisement asserts that under the Clinton plan the government would cap health care spending. “What if our health plan runs out of money?” one of the actors asks, implying that the program would limit procedures available to those in need of care.

The Administration’s plan does include a cap on spending. Whether it would limit care, however, is a highly debated point. Administration officials insist that the country can limit spending on health without rationing care by eliminating bureaucratic waste in the system--much of which Administration officials charge is caused by insurance company paperwork.

A new insurance industry ad attacks the Clinton plan, saying that it would limit choices of health insurance plans. That argument is true--the Clinton plan would, for example, prevent insurers from offering high-deductible plans that cover only “catastrophic” illnesses. But, Administration officials note, now most workers have only limited choices because they can only use the insurance plans that their companies choose. The Clinton plan gives people at least three options to choose from--an increase in choice for most workers.