The fates of the president and the insurance companies have become intertwined. Why Obama isn't attacking 'villains'

President Barack Obama spent years casting insurance companies as the most evil of actors in the health care system.

But with insurance cancellation notices hitting millions of consumers, Obama has launched none of the broadsides that became standard during the legislative fight over health care reform.


This time around, Obama needs the industry to make Obamacare work.

His restrained response over the past week shows just how much the dynamic between Obama and the insurance companies has shifted since the law passed — and how their fates have become intertwined. The health care law expands coverage to millions of Americans by sending them into the private insurance market armed with tax subsidies, forcing the president and his former nemeses into an uneasy partnership that’s only beginning to face strains.

( WATCH: Kathleen Sebelius dodges 'target enrollment' question)

“Their interests are aligned with our interests in terms of wanting to enroll targeted populations,” a senior White House official said Wednesday. “It is not that we will agree with everything now either, but I would say for some time now there has been a collaboration because of that mutual interest.”

The approach hasn’t sat well with some Democratic allies, who are publicly and privately urging the White House to ramp up its attacks on insurers, arguing that the the tactic shored up support as they struggled to push the bill through Congress. A group of Democratic strategists pressed senior administration officials during a conference call last week.

They’d like a repeat of 2009-10, when then-House Speaker Nancy Pelosi (D-Calif.) called insurers “the villains,” Obama blasted their willingness to “bend the truth or break it,” and Health and Human Services Secretary Kathleen Sebelius accused them of banking excessive profits.

PHOTOS: 10 Sebelius quotes about the Obamacare website)

“When Obamacare got into trouble, we juxtaposed our message against the insurance companies, which are very unpopular,” said Celinda Lake, a Democratic pollster who has advised her 2014 clients, including Alaska Sen. Mark Begich, to go after insurers. “We should be messaging against the insurance companies this time as well. This is not good faith. If there is a snowstorm, the insurance companies are blaming it on Obamacare.”

The White House isn’t prepared to go there — not yet.

Senior administration officials said they’re working through a lot of problems with Obamacare and launching a frontal assault on the insurance industry isn’t going to fix them any quicker. And after all of the bad publicity from its own missteps, the White House doesn’t think a blame campaign will earn points with voters, the officials said.

But they also acknowledge that an industry that was the Democratic Party’s default bogeyman for decades is now its collaborator. The administration is spending billions of dollars to convince Americans to buy private health plans through the insurance marketplaces, so it serves no purpose to frighten consumers, the officials said.

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That’s not to say it’s been smooth going since word of the policy cancellations began spreading over the last week.

Senior White House adviser Valerie Jarrett angered insurers when she posted on Twitter that it was a “fact” that “nothing in Obamacare forces people out of their health plans.”

White House press secretary Jay Carney has been critical of insurance companies during his daily briefings, calling the individual market an under-regulated “Wild West.” But he’s tried to strike a balance, casting insurers as engaged in bad practices before the new health care law brought them into line.

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Obama did the same during a health care speech Friday in Boston.

“Remember, before the Affordable Care Act, these bad apple insurers had free rein every single year to limit the care that you received or used minor pre-existing conditions to jack up your premiums or bill you into bankruptcy,” Obama said.

The nuance, if not lost on the industry, isn’t welcomed either.

White House chief of staff Denis McDonough has stepped up his direct outreach to the industry since the rocky launch Oct. 1, inviting insurance executives to the White House last week and attending a board meeting Tuesday of the industry’s lobbying arm, America’s Health Insurance Plans.

But rather than a lashing , the official White House statement on Tuesday’s meeting was benign: “He emphasized the need for all involved in the marketplaces, including the administration, issuers and other stakeholders, both federal and private, to ramp up communication and education efforts to consumers who have received or might receive letters about their individual market plans changing.”

The technical issues that plague HealthCare.gov and the furor over canceled policies may just be the beginning of the challenges.

A long list of flash points will test these strange bedfellows: price tags on premiums and deductible the level of coverage offered in new plans, concern about consumers getting the coverage they’re paying for, pending cuts to Medicare Advantage, taxes that the companies say are unfair, and a renewal of the historic divide between market-conscious insurers and benefit-driven Democrats.

For now, insurers are holding back — but they warn that the peace won’t last long if the White House goes after them.

“The moment that the White House doesn’t have the enrollment numbers that they hope they’ll have, they’ll blame it on the insurance industry,” said one industry executive. “To me, that’s the trigger.”

Insurance industry officials say that they haven’t been getting grief over the cancellations from the Health and Human Services Department or the Centers for Medicare and Medicaid Services because the administration was not only fully aware that some plans would sunset but that White House officials knew that when Obama signed the Affordable Care Act into law.

If the policies weren’t being canceled, the executive said, “the White House would be sh—ting on the insurance industry for continuing to offer plans that were below the threshold.”

Even now, insurers are gearing up to fight the implementation of cuts of nearly $200 billion over 10 years to Medicare Advantage, a system of private insurance plans approved by the federal government that administer Medicare benefits.

Congress delayed those cuts until after the president’s re-election in 2012, and they are scheduled to begin hitting next year. Insurers are warning that if Washington doesn’t act to reverse or soften those cuts, they will try to make sure that seniors take their anger out on incumbent Democrats in next year’s mid-term elections.

At the same time, insurance companies are pushing for relief from a tax on their plans that goes into effect next year and is estimated to raise more than $100 billion over the next decade to help pay for the Affordable Care Act. That’s another sore spot for the insurers, who are certain to point to the tax as a factor driving up premiums and deductibles in future years — particularly if they find themselves fighting the White House over other elements of the implementation.

“I believe you’re going to see the next round on this, now that this wound has been opened up, you’re going to see pressure that one of the reasons premiums are going up, the insurance companies are going to say, is it’s because of these taxes you’re imposing on us,” said Bill Hoagland, a former Cigna official and Senate budget aide who now works at the Bipartisan Policy Center.

For now, the major insurance companies are willing to let the troubles with the website — and even insults from the White House — play out. After all, they have a stake in the law working because they want more customers. But they pegged their prices this year to estimates of the number of people who would enroll. Next year, they’ll have actual data, and that could mean higher prices for policy-holders if the government can’t get its enrollment system up and running properly.

The confluence of the Medicare Advantage cuts, the excise tax, and the website failures may not augur well for a long-term relationship between the White House and the insurers.

“The big problems are yet to come,” Hoagland said.