Last September, ThinkProgress reported that despite its public support for health care reform, the insurance industry was engaged in a “duplicitous” campaign to undermine the effort. Now the National Journal has confirmed that from September to December 2009, “six of the nation’s biggest health insurers began quietly pumping big money into third-party television ads aimed at killing or significantly modifying the major health reform bills moving through Congress.” The companies used America’s Health Insurance Plans — the lobbying arm of the insurance industry — “as a conduit to avoid a repeat of the political flack that hit the insurance industry after it famously ran its multi-million dollar ‘Harry and Louise’ ads to help kill health care reforms during the Clinton administration”:

That money, between $10 million and $20 million, came from Aetna, Cigna, Humana, Kaiser Foundation Health Plans, UnitedHealth Group and Wellpoint, according to two health care lobbyists familiar with the transactions. The companies are all members of the powerful trade group America’s Health Insurance Plans. The funds were solicited by AHIP and funneled to the U.S. Chamber of Commerce to help underwrite tens of millions of dollars of television ads by two business coalitions set up and subsidized by the chamber. Each insurer kicked in at least $1 million and some gave multi-million dollar donations.

Watch a compilation of some of these ads:

The industry’s covert ad campaign isn’t the industry’s only means of wasting millions of premium dollars on sabotaging reform. As former health insurance executive Wendell Potter told ThinkProgress, insurers are using a variety of front groups to advance a hidden attack campaign. The industry regularly feeds talking points to right-wing media like Rush Limbaugh and Fox News, mobilizes anti-reform “grassroots” groups and coordinates with conservative think-tanks to produce academic-appearing reports to advance their cause.

The insurance industry has also funded state efforts to challenge the constitutionality of health reform. Insurers have “spent heavily on political contributions” in the 14 states seeking to ratify constitutional amendments that would repeal all or parts of the new measure and contributed thousands of dollars to the attorneys generals seeking to disqualify reform. Earlier this month, Lee Fang reported that Blue Cross Blue Shield Association “played a pivotal role in crafting this anti-health reform states’ rights initiative.”

National Journal’s report should be the last nail in the coffin of AHIP’s public charm campaign. Throughout the health care debate, AHIP President and CEO Karen Ignagni repeatedly reassured the public that insurers were committed to health care reform and even produced a plan for reforming the system. “We understand that we have to earn a seat at the table,” Ignagni told Obama during the White House Health Summit in March 2009. “You have our commitment to play, to contribute, and to help pass health care reform this year,” she promised.

Even after the industry sponsored several reports criticizing reform legislation, AHIP always reiterated the insurance industry’s “commitment” to reforming the health system. “We don’t want to let Americans down. It’s very important. We promised that we are committed to this. Our industry is for-square behind it, but we have an obligation to explain how to make that happen,” Ignagni told Congress in October, as her industry was donating millions of dollars to defeat reform. In fact, insurers have long been dues-paying members of the Chamber. AETNA has given $100,000 to the Chamber, while Unitedhealth Group payed at least $20,000.

This afternoon, Health Care for America Now (HCAN) hosted a press call outlining some of the remaining loopholes in federal health care reform legislation. Rep. John Garamendi (D-CA), health expert Karen Pollitz, former Blue Cross chief medical officer and former state regulator Michael McGarvey, and Wendell Potter urged lawmakers to include a national health care exchange in the final health care reform bill.

“The state governments vary in their ability to enforce and the influence of the insurance industry varies throughout the states and even in states that have a strong regulatory framework like California, you can wind up with a commissioner that has no interest in protecting consumers but rather protecting the industry.” “You need a broad based exchange because many states would never be able to do because they’re just plane small to begin with,” Garamendi explained.

The experts stressed that state based exchanges could not guarantee insurer compliance with the new regulations but also warned against various ways insurers could use the weak regulatory language in health care reform to game the system and avoid covering the sickest and most expensive applicants.

Listen to a compilation:

1. Employer wellness exception: The House and Senate health care bills allow insurers to provide incentives tied to voluntary “wellness programs.” “Current regulations allow group plans to offer rewards up to 20 percent of premium rates for employees who meet certain health goals.” The Senate bill would permit insurers to vary premiums by 30% and officials at the Health and Human Services Department could bump that variation up to 50%.” “Now instead of being able to charge people more because they’re sick, insurers will be able to charge them more because they’re not well [and not able to participate in the wellness initiatives.] And instead of calling those people victims of discrimination, we’ll say it’s their fault,” Pollitz said on the call.

2. Employer plans exempt from some regulations: Under the Senate bill, large employers can’t discriminate against pre-existing conditions or impose life time or annual limits on coverage. But since insurers in the large group market are not required to provide essential benefits packages, they could associate certain treatments with very high deductibles and cost sharing.

3. Insurers will seek to do business in weak state exchanges: “If this is done on a state-by-state basis, you can be sure that there will be a race to the bottom in a sense, by insurance companies seeking to do as much business as possible in the weakly regulated states,” McGarvey said. Garamendi recalled cases in California where “we spent a lot of money chasing after companies that were illegally operating in California but where licensed in other states and frankly were selling just absolute junk.”

“It’s very important in health reform and for pooling and for consumer protection, for all of the rules to work together and to be air tight. As soon as you sort of leave an opening, the tendency to exploit that opening for purposes of discriminating and not paying claims is going to be used,” Pollitz said, suggesting that House and Senate negotiators have one final opportunity to close the loopholes as they merge the two bills. In fact, Democrats would be foolish to ignore it. Reform that allows insurers to circumvent the new regulations and push Americans into bankruptcy would not only severely disadvantage the American public, but it would also create serious political consequences. The effort will lose its constituency and rob the party of its crowning domestic achievement. And if Democrats don’t address these known problems in the final bill, they may be too overrun by the unforeseen consequences of the legislation and the implementation process to address them after reform is enacted.

It’s also worth nothing that the public may be fed up with the reform process, but it could very well support a tougher crack-down on insurers. A recent CBS poll found that 43% of Americans don’t think reform goes far enough in regulating health insurance companies.

The Wall Street Journal is reporting that “House and Senate negotiators are considering applying for the first time the Medicare payroll tax to investment income as part of a compromise to pay for a health overhaul.” Medicare taxes are now assessed only on wages and self- employment income and some progressives have long argued that forcing “people living off investments to contribute taxes to the health care system” could be a good way of raising money for health care reform. As Steve Wamhoff, legislative director of Citizens for Tax Justice put it, “If the only income Paris Hilton gets is capital gains, stock dividends, interest and other types of investment income, currently she is completely exempt from the one big tax we have right now that is dedicated to health care.” “We’re saying that probably doesn’t make sense.” The argument is simple: individuals who earn a higher share of their income from investments should pay their fair share. If the Medicare payroll tax applies to all wage income – why shouldn’t it also apply to non-wage income?

The Senate Finance Committee considered the proposal over the summer, and Majority Leader Reid (D-NV) came close to including it in the merged Senate bill. My colleague Pat Garofalo explanis why:

The Medicare payroll tax is the “one important tax we already have that is dedicated to funding health care, but it completely exempts wealthy investors whose income takes the form of capital gains, stock dividends, and interest.”… According to an analysis by Citizens for Tax Justice, if this change occurred, “most Americans would either see no tax increase at all or would see a tax increase of less than $100 a year.” More than 64 percent of the increase would be paid by the richest one percent of Americans, and more than 80 percent would be paid by the richest five percent. And for the tax to not unfairly hit moderate income seniors who live off of investment, some sort of senior exemption would need to be included.

Extending the payroll tax to dividends and other income from investments could “raise $111 billion over 10 years,” but “it remains unclear whether investment income under a final House-Senate deal would pay the same freight as wages, 2.35% in the Senate-passed bill, or whether it would be subject to a lower rate, such as the 1.45% in [Sen. Debbie] Stabenow’s initial proposal.” The Senate health care bill already raises “the worker contribution to 2.35% for individuals making more than $200,000 a year and couples making more than $250,000 a year.”

The new tax would allow negotiators to raise the threshold on the excise tax, an important priority for organized labor, and please House members looking for a ‘get’ in the final legislation.

On Friday, during a town hall in Houghton, Michigan Rep. Bart Stupak (D-MI) refused to commit to voting against a health care bill that did not include the House bill’s abortion language. “I will work with Democratic leadership, hopefully we’ll get this issue worked” Stupak began, as the audience broke out in laughter at his nonresponse.

After repeatedly pledging to vote against any bill that did not include very severe restrictions on abortion, Stupak emphasized at the town hall that he does not make outright commitments or pledges and explained that if the final legislation did not meet his requirements, he would review the entire bill before deciding how he would vote:

If this public funding for abortion, if we change current policy, I will read the bill, make sure if that is the last issue, I probably will not vote for it. But I am not going to — we’re still negotiating. You do not play all your cards at the poker table while you are negotiating…. I would be hard-pressed to vote for something that has public funding for abortion…Let’s read the legislation and see what it says.

Watch it:

It’s unlikely that the final health care bill would not provide federal funding for abortion that goes beyond the Hyde restrictions. The original Capps Amendment in the House bill and the abortion compromise in the Senate legislation both segregate public and private funds, and only allow private premiums to be used for abortion coverage. The Senate bill would require the applicant to write a separate check to pay for abortion services.

Stupak claimed that he had rounded up 10 or 12 other Representatives (he had previously said he had 10-20 commitments) to vote against a final bill that does effectively ban coverage for most abortions from all public and private health plans in the exchange. “I really feel, because there is such a strong sentiment in the U.S. Congress to get health care worked out, it may not be the end of January, it might be the end of February and I don’t see anything magic between January 28th, having it done by then or February 28th,” he said. “I think in the final analysis it will get resolved. I hope it does, but if it doesn’t…maybe you do have to defeat it. Doesn’t prevent you 30 days later from bringing back a bill addressing the objections of members and why the voted against it.” “There is time to do it…I think we get a health care bill eventually.”