U.S. President Barack Obama, pushing for healthcare reform during a trip to conservative Montana, said on Friday the country was held hostage by insurance companies that deny coverage to sick people.

Obama, on a multi-state swing to tamp down vociferous opposition to his top domestic priority, targeted insurance companies for dropping customers who become sick or forcing patients to cover huge costs.

We are held hostage at any given moment by health insurance companies that deny coverage or drop coverage or charge fees that people can't afford, Obama told a crowd of some 1,000 people in Montana.

It's wrong. It's bankrupting families. It's bankrupting businesses. And we are going to fix it when we pass health insurance reform this year, he said.

In a half-work, half-play trip with his family that will include stops at the Grand Canyon and other national parks, Obama, a Democrat, aims to emphasize the benefits of his $1 trillion plan to overhaul the insurance industry, expand healthcare coverage and cut costs to consumers.

Protesters and supporters lined up outside the venue for his first town hall-style meeting in Montana, where the White House said he would make remarks on insurance company reform before taking an hour of questions from the audience.

Obama has been fighting against Republican criticism that his plan amounts to a government takeover. The issue has sparked emotional and sometimes hostile questioning from citizens at similar question-and-answer sessions with lawmakers across the country.

I hope in answering concerns he changes minds, White House spokesman Robert Gibbs said on Friday.

Montana supported Republican presidential candidate John McCain in the 2008 election.

Obama's town hall meetings in Montana on Friday and Colorado on Saturday will be his second and third such events in less than a week, after a meeting in New Hampshire on Tuesday.

They come as poll numbers reflect concern about the U.S. budget deficit and Republicans contend that the plan would be an expensive mistake, especially as the country tries to emerge from the worst financial crisis since the Great Depression.

People are concerned about several things: one the cost, and number two, they won't have free choice, said Montana Republican Party Chairman Will Deschamps in telephone interview with Reuters.

This thing is sinking like a rock in a stream, he said.

Screaming demonstrators have disrupted some recent public meetings on healthcare held by members of Congress from Obama's Democratic Party. They captured media attention and overshadowed debate on the plan's complex details.

The people that make the most noise get the most press, said David O'Connor, 63, a Democrat at the Montana event. I think we definitely need healthcare reform of some kind.

Even some healthcare supporters have faulted Obama for relying too heavily on others to make his case, and criticized the White House for letting healthcare opponents dominate the discussion.
It's OK if the fringes believe certain things, but you don't want their ideas creeping into the mainstream, said Darrell West of the Brookings Institution in Washington.

(Additional reporting by Patricia Zengerle, Thomas Ferraro, and Ross Colvin; Editing by David Alexander and Eric Beech)

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