Democrats divided over Waxman's plan to grill insurance executives

Democrats are split over Rep. Henry Waxman’s (D-Calif.) plan to hold high-profile hearings to pressure the insurance industry.

Some are convinced that additional attacks will help drum up the public support necessary to carry reform across the finish line.

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“It’s completely fair to talk about profits and reserves and compensation and how they make their decisions,” said Rep. Jan Schakowsky (D-Ill.), a leader of the Progressive Caucus. “Let them come and make their case.”

Schakowsky leads a caucus that has fought for a public option to compete with the private insurers, and she said she hoped an executive compensation hearing would have the same impact as last year’s hearings examining the salaries of top oil company executives during the height of the gas crisis.

Other Democrats aren’t sure grilling insurance executives is the best strategy. They argue it could complicate the narrative that Democrats should be writing, which is that reforming healthcare involves much more than insurance reforms.

“What the healthcare economists are adamant about is that any one of these measures taken in isolation will not solve the problem,” said Rep. Bruce Braley (D-Iowa).

“The public option: Increase competition, address the large profits insurance companies are adding to the cost of healthcare, great idea. But if you just focus on that one issue without addressing the payment system itself, you’re not going to get where you need to go,” he said.

The differences show that a week after President Barack Obama’s address to a joint session of Congress, which was meant to unify Democrats, the ideological divisions that plagued the party in July haven’t disappeared.

Conservative Blue Dog Democrats made similar arguments during their intense negotiations with Waxman and House leaders over the shape of the original House healthcare bill, arguing that a greater emphasis needed to be placed on cost controls that could be achieved by means other than cutting down the private insurance industry.

Regardless, Waxman and the House Energy and Commerce Committee appear to be heading forward.

Rep. Bart Stupak (D-Mich.), chairman of the Investigations subcommittee, said Tuesday that most of the nation’s 52 largest insurance companies met Monday’s deadline to submit documents on their profits and compensation to executives and board members. He also said a hearing is being put together.

“We will be doing hearings on different aspects of the insurance industry, including this,” Stupak said. “I hope that by the end of this week we’ll have a schedule set … I’d like to do another one of these, at least one or two, this month.”

The hearing will come at a critical time in the healthcare debate. Polls show slipping public support for the reform plan being pushed by Democrats, even as momentum builds in the Senate for a compromise approach that many liberal Democrats say will fall far short of their goals.

Speaker Nancy Pelosi (D-Calif.) sent her caucus home for the August recess to promote the idea that private health insurance companies were the “real villains” in the health reform debate. That message, however, was quickly drowned out by a tidal wave of anger over the size and role of the federal government, including the government’s proposed involvement in providing healthcare to Americans.

Stupak’s subcommittee hearing in June, in which health insurance executives explained their rationale for “rescission,” did not receive the same level of attention as last summer’s oil executive hearing. The controversial practice of rescission involves retroactively canceling the individual health insurance policies of patients who sought treatment for major illnesses soon after signing up for coverage due to pre-existing conditions. In some cases, policyholders unaware that they had such conditions saw their insurance policies canceled.

But in his address to Congress, Obama referenced testimony from the rescission hearing in making the case that private insurers lack the incentives to prohibit such practices. And the shock and anger in reaction to those stories has not been limited to Democrats.

“Doesn’t it bother you that people are going to die because you insist on reviewing a policy that somebody took out in good faith and forgot to tell you that they were being treated for acne? Doesn’t that bother you?” the Energy panel’s top Republican, Rep. Joe Barton (Texas), asked at the rescission hearing. “We’ll back you up on fraud and misrepresentation, but I don’t think you’re going to get a vote, at all, on rescissions that are not material to the claim being processed.”

Still, Democrats have been unable to educe the same kind of widespread public anger toward the health insurance industry that they believe is necessary to forcefully push the strongest reform bill possible onto Obama’s desk.

Many Democrats believe continued Oversight hearings could accomplish that goal.

“Blue Cross Blue Shield, which is the insurer of last resort in Michigan, they’re raising their rates 22 to 40 percent,” Stupak said. “How do you justify that when inflation is basically zero? Where is the money going? Is it going for healthcare? Or executive compensation?”

“I think it’s part of the mix, in that our committee needs to look at it,” said Rep. Gene Green (D-Texas). “I remember a quote from Sen. [Charles] Schumer [D-N.Y.] sometime this year … he said that some of those healthcare CEOs’ packages would even make Exxon-Mobil blush.”

“This is an important component of [the debate],” concurred Braley, the vice chairman of Stupak’s subcommittee. “And it’s no different than all the other nine previous hearings with 89 witnesses we had on healthcare reform … My concern is that the American people deserve a frank and candid discussion about all of the contributing factors to our runaway healthcare system.”