Obama vs. the Insurance Industry: Behind the 'Smoke and Mirrors' in the Health Care Debate

This is a rush transcript from "On the Record," October 19, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: President Obama says insurers are using smoke and mirrors in the health care debate. The health care industry had an audit done on the Senate Finance Committee health care plan, and the audit found that the Senate plan would increase insurance premium costs. President Obama -- he's not buying it.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It's smoke and mirrors. It's bogus. And it's all to familiar. Every time we get close to passing reform, the insurance companies produce these phony studies as a prescription and say, Take one of these and call us in a decade.

Well, not this time. The fact is, the insurance industry is making this last ditch effort to stop reform even as costs continue to rise and our health care dollars continue to be poured into their profits, bonuses and administrative costs that do nothing to make us healthy, that often actually go toward figuring out how to avoid covering people.

(END VIDEO CLIP)

VAN SUSTEREN: Well, is that true? We reached out to the White House and they were unable to provide someone on this issue, though they did promise to have someone go "On the Record" this week.

Joining us live is Jeff Birnbaum, digital managing editor for The Washington Times. And that's sort of a good sign that they're going to send us someone later this week, in spite of the little spat going on. I mean, that's...

JEFF BIRNBAUM, WASHINGTON TIMES: That's a very good sign, if they do so.

VAN SUSTEREN: Well, they said so. I mean, I'll take them at their word. All right. And then, of course, we got to show this. This is the 1,509, I think, pages of the bill. All right. So now the insurance question. What's the story? Are the insurance companies making a ton of money or not?

BIRNBAUM: Yes. Well, insurance companies are making money. "A ton of money" depends on which analysts you speak to. They are profitable, and they're very careful to remain profitable. That's why every year, insurance premiums go up. And they've been going up quite substantially, and there's no doubting that.

VAN SUSTEREN: If this bill does pass in whatever form we ultimately have, will insurance premiums go up, what you and I pay and what everybody else pays?

BIRNBAUM: Probably somewhat. I think that the argument is over would it go up as much as the insurance industry claimed they would in the study that they put out right before the Senate Finance Committee voted its bill, which you have there, out of committee. Thousands of dollars is what the insurance company claimed over...

VAN SUSTEREN: Do you believe that? Thousands of dollars? I mean -- you know, I mean -- I mean, it's a little bit like sending the fox out to guard the chicken coop to ask the insurance company that question. I suppose on the flip side, it's like sending the fox out to guard -- guard the chicken coop, but -- do you believe that?

BIRNBAUM: Probably not. I think that there are enough holes in the Price Waterhouse Coopers plan that some of their assumptions I think were misplaced. I think it showed a worst case scenario that indicated what -- how much it could possibly go up if all things went the way they wanted it to. And that weakness gave the president the opening to go after the insurance companies, a group that the American public doesn't like anyway and is more than happy to think ill of.

VAN SUSTEREN: Well, it seems -- I mean, OK, so if the American people aren't crazy about the insurance companies, their best audience probably was the Senate Finance Committee. So it seems to me like a pretty dumb time to release the report when they did. They should have probably -- at least, if I were their lawyer or their PR person, I would have said, Do it earlier so you have an impact on these pages.

BIRNBAUM: At least a month earlier. I was very surprised. I actually have written for years about interest groups in Washington, and I've considered the insurers to be among the smartest of these.

VAN SUSTEREN: Smartest in terms of PR and lobbying...

BIRNBAUM: PR, lobbying...

VAN SUSTEREN: ... not necessarily -- OK.

BIRNBAUM: No, I'm not talking about their business, but they have some really first-rate lobbying executives in Washington. But to put out a plan meant to stick a knife into the -- into the reform on the day before everyone understood completely that it was going to pass, that there wouldn't be a problem, seemed to be terribly mistimed. It should have been at least a month before, if they had hoped to have any sort of impact and be part of the debate. Instead, they were simply a target for disdain from the president himself. And it gave him a foil that everyone can believe in. That is, the public has to stand with him, if he stands against the already unpopular insurance companies.

VAN SUSTEREN: It's interesting looking at sort of now there's going to be a lot of scrambling among special interests in earnest. For instance, medical device people are going to scramble to get -- they've got Senator Kerry on their side because they think that they're going to lose $4 billion or some significant sum. I can't remember that. But now it's the scramble, right, where all the lobbyists hit Capitol Hill and hustle their congressmen and senators to...

BIRNBAUM: In fact, lobbying has been going on for a long, long time. Lobbying is not a last-minute thing. That's what really surprised me about this effort. It was way too late. Lobbying has to be done quietly and early, and you have to find allies and build them to -- when the vote comes, then people are surprised that it goes the way of the interest groups, not the other way around. This was sort of ham-handed.

But yes, the medical device people are also in trouble, in part because they don't have a very firm base of support among the public, and the public really will have a lot to say about how this comes out in the end.

VAN SUSTEREN: One quick question. You've read all these pages, right?

BIRNBAUM: Uh, no.

(LAUGHTER)

VAN SUSTEREN: I wonder if anybody has! I don't think anybody has! (INAUDIBLE) big lie in Washington! Jeff, thank you.

BIRNBAUM: Thank you.

Content and Programming Copyright 2009 FOX News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2009 CQ Transcriptions, LLC, which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon FOX News Network, LLC'S and CQ Transcriptions, LLC's copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.