Obama Hammers Insurance Companies

As he makes a last push for health reform, President Obama is setting his sights on a familiar target: insurance-company profits.

Obama and the Democrats in Congress got a lot of mileage from Anthem Blue Cross' proposed premium increases in California. Now, the president is armed with a Goldman Sachs report that recommends buying shares of UnitedHealth Group Inc. and Cigna Corp. because rates are heading up and competition is weak.

In his speech to Arcadia University near Philadelphia this morning, Obama digs in:

"You see, these insurance companies have made a calculation. The other day, on a conference call organized by Goldman Sachs, an insurance broker told Wall Street investors that insurance companies know they will lose customers if they keep raising premiums. But since there’s so little competition in the insurance industry, they’re OK with people being priced out of health insurance because they’ll still make more by raising premiums on the customers they have. And they will keep doing this for as long as they can get away with it."

The broker Obama refers to is Steve Lewis, executive vice president at Willis, a firm that works with many midsize businesses. Lewis did a conference call with investors at the request of Goldman analyst Matt Borsch. Here's part of what Lewis had to say:

"We feel this is the most challenging environment for us and our clients in my 20 years in the business. Not only is price competition down from year ago (when we had characterized last year's price competition as being down from the prior year), but trend or (health care) inflation is also up and appears to be rising. The incumbent carriers seem more willing than ever to walk away from existing business."

It's an assessment that's likely to put insurers back on the defensive. So far, flogging the insurers hasn't helped Obama's polls numbers on health reform. We'll see if hammering the message some more will have any effect on voter sentiment.

Update, 2:45 p.m.: Obama blamed members of Congress for the standstill on health reform, saying that these politicians are more worried about getting reelected than helping Americans secure affordable health care, the Philadelphia Business Journal reports.

“You want people in Washington to spend a little less time worrying about our jobs, a little more time worrying about your jobs,” he told the crowd of more than 2,000 people at Arcadia.

And the insurers? “We can’t have a system that works better for the insurance companies than it does for the American people.”