Business Groups Push Hard Against the Senate Bill

By JANET ADAMY

Employers are blasting the Senate's plan to create a new public health-insurance program -- a sign of how businesses are becoming increasingly uneasy about Democrats' proposals to overhaul the health system.

WSJ's Janet Adamy explains why small businesses are against a government health plan, noting that what they save in upfront costs may end up costing them even more in taxes to pay for the overall plan.

Lobbyists for employers thought they had staved off a public plan in the Senate after the Finance Committee opted not to include the idea in its version of the health legislation. They were caught by surprise when the public plan resurfaced and Majority Leader Harry Reid (D., Nev.) said it would be in the bill brought to the Senate floor, albeit with an option for states not to participate.
President Barack Obama invited a group of small-business owners to meet with him at the White House Thursday. He will make the case that the health overhaul will give them the ability to control health costs.
The Business Roundtable, an association of company executives, is calling and visiting lawmakers to persuade them not to include the public plan in the legislation. The U.S. Chamber of Commerce on Wednesday began airing cable-television advertisements in seven states arguing that the public option will lead to higher taxes and increase the national debt.
"We cannot support a public plan," said Antonio Perez, chief executive of Eastman Kodak Co. and a member of the Roundtable. "That cost is going to come back to you one way or another."
The public plan is designed for those who buy insurance on their own as well as small businesses. Most people who work for midsize and large companies wouldn't be eligible.
Large employers are concerned that the plan will end up raising their health-insurance costs. They believe that if the government pays doctors and hospitals at lower rates than do private insurance companies, the health industry would try to pass the cost on to those with private insurance.

Small-business groups, for the most part, are against the public plan, despite the fact that Democrats say they engineered it with small business in mind. "We don't think that the public plan is needed to spur competition," said Susan Eckerly, senior vice president of public policy at the National Federation of Independent Business.
The group, which represents 350,000 small firms, said the overwhelming majority oppose the idea, in part because they are skeptical of large government programs. Small businesses pay higher prices for insurance than do large employers because they don't have as many people to spread out the risk of covering sick employees. Instead of a public plan, they say, proposals to create new health-insurance exchanges and prevent insurers from discriminating against people with pre-existing health conditions will more effectively bring down their costs.
Warren Hudak, who owns an accounting firm in New Cumberland, Pa., said only one insurance company will offer him an affordable policy to cover his six employees. His wife has multiple sclerosis, which has driven up the whole firm's insurance costs so that a high-deductible family policy costs $1,300 a month. But he wouldn't want to switch to a government plan. "My wife might not be able to take her drug that she's taking right now," said Mr. Hudak, who is one of the employers invited to the White House on Thursday.
Not all small-business groups oppose the public plan. At least one, the Small Business Majority -- which has less clout than the National Federation of Independent Business -- argues that businesses need a public option to give them an alternative in a consolidated insurance market. "It just doesn't provide small-business owners with much choice when we go to buy insurance," said John Arensmeyer, chief executive of the Small Business Majority.
Write to Janet Adamy at janet.adamy@wsj.com