Health costs divide 'unacceptable' says Obama

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The Independent US

US president Barack Obama quoted a new White House study suggesting that small businesses pay far more per employee for health insurance than big companies, said the disparity was "unsustainable" and "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 paid up to 18% more to provide health insurance for their employees.

As a result, fewer of them did and the number had been shrinking further in the hard economic times.

Then study was released yesterday as part of the Obama administration's aggressive campaign to build public and congressional support for the president's health care reforms.

Mr Obama had called for Congress to vote on health legislation by the August recess, but when it became clear this week that politicians would miss that deadline, he said he expected a bill by the end of the year.

Meanwhile, in a setback for Mr Obama, congressional budget scorekeepers said one highly touted idea for saving money from Medicare to finance a health overhaul would yield only modest savings.

The Congressional Budget Office says that creating a powerful commission to recommend Medicare cuts would produce only about £1.2 billion in savings over 10 years. Cuts the commission agreed on would go into effect unless Congress overrode them.

White House budget director Peter 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 materialise.

The goal "was never to generate savings over the next decade", Mr Orszag said, but the proposal could be "a game changer" in the long run if enacted.

The White House study said only 49% of businesses with three to nine workers and 78% of companies with 10 to 24 workers offered any type of health insurance to their employees last year. In contrast, 99% 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," Mr Obama said, citing the report.

Mr Obama criticised 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".

But Republicans dismissed the new report as more political propaganda by the administration as it struggles to win approval of its centrepiece 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 of Representatives minority leader John Boehner said. "No report can change that."

And in the weekly Republican address, Rep Cathy McMorris Rodgers of Washington state, vice chairman of the House Republican Conference, 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 £152,000 to offer health insurance to their workers or face a surtax of as much as 8%. A Senate committee version would require all businesses, except those with fewer than 25 employees, to provide health coverage or pay a £457 fine per year for each worker.

Congress is considering plans to bring small businesses into the programme 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 buy 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".