President Barack Obama assailed insurance companies on Tuesday and scolded critics in a bid to overcome skepticism of a U.S. healthcare overhaul at a town hall meeting that drew protests outside.

Obama’s assault on the insurance business was part of an effort to convince Americans that a speedy, $1 trillion overhaul is needed to fix a ‘broken system’ and push back against conservatives who charge he wants a government takeover of healthcare.

As opponents and proponents of his plan rallied outside a New Hampshire high school, Obama faced a civil, largely supportive crowd inside. It was a sharp contrast to the angry town hall questions faced by Democratic Senators Claire McCaskill in Missouri and Arlen Specter in Pennsylvania.

Few people challenged Obama’s healthcare plans, while those attending the town hall sessions in Pennsylvania and Missouri posed tough and sometimes hostile questions to the lawmakers.

‘Where we do disagree,’ Obama said, ‘let’s disagree over things that are real, not these wild misrepresentations that bear no resemblance to anything that’s actually been proposed.’

In his most extensive criticism of the insurance industry since the debate over healthcare began, he accused companies of rationing care and receiving unneeded government subsidies.

Obama charged that Americans are too often ‘held hostage’ by insurance companies that deny or drop their coverage or charge fees they cannot afford.

‘I believe it is wrong; it is bankrupting families and businesses and that is why we’re going to pass health insurance reform in 2009,’ Obama said.

Outside, about a thousand people gathered on the road leading to the school.

Supporters of Obama chanted ‘Yes, we can!’ and waved signs saying, ‘Insurance companies are enemies of change’ and ‘All Americans deserve affordable healthcare.’

On the other side of the street, opponents held banners saying ‘Obamacare, down the chute granny’ and ‘Hands off my healthcare.’

Obama bypassed the crowd on his way into the school.

The president is trying to grab back the initiative on the healthcare overhaul from critics who have helped stoke public anger against his top domestic priority.

Obama’s push for healthcare reform, which seeks to provide coverage to nearly 46 million uninsured Americans, rein in rising medical costs and regulate insurers, has been assailed by Republican critics over its cost and far-reaching scope.

The increasingly bitter debate has dragged down Obama’s once-lofty approval ratings.

Obama accused critics of employing scare tactics, and appeared to single out former Alaska Governor Sarah Palin without mentioning her by name.

The Republican Palin had charged that Democratic proposals would allow government bureaucrats to decide end-of-life issues for older Americans, a claim that has been played up on conservative talk radio. Palin had said last week the legislation would create government ‘death panels.’

Death Panels

Obama said the intent of the legislation was to set up a way to give people more information on end-of-life care, not to ‘create death panels that will basically pull the plug on grandma because we decided it’s too expensive to let her live anymore.’

‘I am not in favor of that. I just want to clear the air,’ Obama said to laughter.

In a new development, Obama said the government may be able to get pharmaceutical companies to give back more than the $80 billion already promised in prescription drug rebates — indicating his administration was pushing firms to go further.

‘We may be able to get even more than that,’ he said.

Afterward, most audience members said they backed Obama’s proposals and some were starstruck.

But Mike Petruzziello, 52, a retired Marine said, ‘What they’re proposing is taking a good system and throwing it out. I know we need to do something but the fix should be evolutionary, not revolutionary.’

The atmosphere was tame compared to other town halls on the subject held by Democratic legislators, some of which have been angrily disrupted by critics in behavior that U.S. House of Representatives Speaker Nancy Pelosi has called ‘un-American.’

‘I don’t want people to think I have a bunch of plants here,’ Obama joked at the meeting, recognizing he had been fielding relatively softball inquiries.

Earlier in Lebanon, Pennsylvania, Specter was confronted by voters who asked about the high cost of healthcare and possible government snooping in their bank accounts.

The five-term senator was shouted at by a man angry over not being able to ask a question. Another man expressed concern that the healthcare legislation might require him to have counseling every five years about ‘dying with dignity.’

In Missouri, at least one woman was ejected after an apparent scuffle and hostile questioners confronted McCaskill.

‘I’m lucky to have this job and work for you even though today may be a little tough,’ she said.