By Phil Mattera, Dirt Diggers Digest

You've got to hand it to the health insurance corporations and their front groups for knowing how to play hardball. To protect the interests of the industry, they have been willing to spread outlandish allegations about euthanasia, gambling that the ensuing uproar will force nervous Democrats to dilute their plan. 

It remains to be seen whether the streetfighters ultimately prevail, but for now they have succeeded in reframing the debate. The country has been talking about pulling the plug on grandma when we should be discussing pulling the plug on the likes of Aetna, Cigna and Humana. 

Unfortunately, the Obama administration and the Democratic leadership in Congress have ruled out euthanizing the for-profit health insurance, leaving us with the alternative of a public plan that would compete with the commercial carriers and supposedly "keep them honest," as Obama likes to put it. 

Since the industry doesn't seem interested in becoming virtuous, it has instead encouraged opposition to the public option. Apart from whatever behind-the-scenes role it has played in the town hall disruptions carried out by the right-wing lunatic fringe, the major insurers are cultivating the fifth column that is undermining the public option from within the Democratic Party. 

It's widely known that members of the Blue Dog Coalition have been showered with campaign contributions from the industry. A recent Business Week cover story entitled "The Health Insurers Have Already Won" details other ways the big insurers have cozied up to and co-opted conservative Democrats. 

I've already written about the suspicious role the Lewin Group, owned by UnitedHealth Group but purportedly editorially independent, has played in the reform debate. Business Week describes how UnitedHealth itself feeds self-serving data to "information-starved congressional staff members." The magazine depicts an especially close relationship between the company and Sen. Mark Warner of Virginia, who "echoes UnitedHealth's contention that a so-called public option could be a 'Trojan horse for a single-payer system.'" 

The infatuation of Warner and some other Democrats with UnitedHealth is all the more baffling in light of the controversy over the company's Golden Rule Insurance subsidiary, which has repeatedly been fined by state regulators for deceptive practices. Golden Rule was one of the companies singled-out in a recent House Energy & Commerce Committee hearing on abuses in the individual health insurance market. 

Business Week reports that the health insurers consider the battle against the public option already won and are now focusing on shaping the terms under which they will be providing new subsidized coverage. They are, the magazine says, pursuing the "aim of constraining the new benefits that will become available to tens of millions of people who are currently uninsured."

How long will it be before Obama, having abandoned the public option, finds himself pressured by the health insurers and their surrogates to give ground on other aspects of the reform plan, such as the elimination of lifetime benefit caps? Or the prohibition on denying coverage based on pre-existing conditions? The insurance reform effort will continue its slide toward irrelevance until President Obama recognizes that he is engaged not in a boxing match with Marquis of Queensberry rules but rather a knife fight in which anything goes. 

Philip Mattera is director of the Corporate Research Project at Good Jobs First.