WASHINGTON - President Barack Obama, citing a new White House study suggesting that small businesses pay far more per employee for health insurance than big companies, said Saturday the disparity is "unsustainable -- it's unacceptable."
"And it's going to change when I sign health insurance reform into law," the president said in his weekly Internet and radio address.
A new study by the White House Council of Economic Advisers said small businesses pay up to 18 per cent more to provide health insurance for their employees. As a result, fewer of them do so and the number has been shrinking further in these hard economic times.
It was released Saturday as part of the administration's aggressive campaign to build public and congressional support for Obama's health care efforts
Obama had called for Congress to vote on health legislation by the August recess, but when it became clear this week lawmakers would miss that deadline, he said he expects a bill by year-end.
Separately, congressional budget scorekeepers say one highly touted idea for saving money from Medicare to finance a health overhaul would only yield modest savings. In a setback for Obama, the Congressional Budget Office says that creating a powerful commission to recommend Medicare cuts would produce only about $2 billion in savings over 10 years. Cuts the commission agreed on would go into effect unless Congress overrides them.
White House budget director Peter R. Orszag said the commission's new powers would take effect in 2015, and therefore its proposed long-term savings would take more than a decade to fully materialize. The goal "was never to generate savings over the next decade," Orszag said in a statement, but the proposal could be "a game changer" in the long run if enacted.
On the issue regarding small businesses, the White House study said only 49 per cent of businesses with three to nine workers and 78 per cent of companies with 10 to 24 workers offered any type of health insurance to their employees in 2008. In contrast, 99 per cent of companies with more than 200 workers offered health insurance.
Small companies pay proportionately more than big ones because they lack bargaining power and face higher administrative costs, the study found. It said that effectively levied a "heavy tax" on small businesses and their employees.
"Right now, they are getting crushed by skyrocketing health care costs," Obama said, citing the report.
Republicans dismissed the new report as more political propaganda by the administration as it struggles to win approval of its centerpiece domestic priority.
"There's a reason why almost every employer and small business group is opposed to the Democrats' government takeover of health care, and that's because it would impose new job-killing taxes during a recession," House Minority Leader John Boehner said. "No report can change that."
And in the weekly Republican address, Rep. Cathy McMorris Rodgers of Washington state, vice chair of the House Republican Conference, said, "America's small businesses will pay a high price." Citing a study by the National Federation of Independent Business, she said Democratic-written proposals would destroy a million more jobs than the economy has already lost.
She called the Democratic efforts "a prescription for disaster -- one that will put Washington bureaucrats in charge of your family's personal medical decision."
A proposal in the House calls for employers with a total payroll above $250,000 to offer health insurance to their workers or face a surtax of as much as 8 per cent. A Senate committee version would require all businesses, except those with fewer than 25 employees, to provide health coverage or pay a $750 fine per year for each worker.
Congress is weighing plans to bring small businesses into the program that would exempt them from such stiff penalties.
Among the provisions in draft legislation viewed favourably by the administration are: an "insurance exchange" allowing small businesses that meet certain criteria to be able to purchase health insurance from a multitude of plans; and tax credits to help small businesses pay for the coverage.
Christina Romer, head of the Council of Economic Advisers, said such provisions would enable small businesses to be "more able to compete with the big boys" in selling their goods and services and "able to compete fairly on a level playing field with big businesses to attract the best workers,"
"The vast majority of small businesses, they'll see their burdens absolutely lessened by the expansion of coverage," Romer said in a conference call with reporters. "So they are absolutely going to be more competitive."
Obama decried what he said were tactics by opponents to block health care overhaul "as a way to inflict political damage on my administration. I'll leave it to them to explain that to the American people."
"Today, after a lot of hard work in Congress, we are closer than ever before to finally passing reform that will reduce costs, expand coverage and provide more choices for our families and businesses," Obama said.
Meanwhile, Rep. Eric Cantor, the House Republican whip, invited small business owners from across the country to a round-table discussion with senior Republican officials on Tuesday to discuss the struggles facing small business. Among those invited, said Cantor spokesman Brad Dayspring, are those with businesses in the congressional district of conservative "Blue Dog" Democrats, who have raised questions about the cost of the health care efforts.
