President Barack Obama said Saturday that Democratic plans to revamp the U.S. healthcare system would benefit small businesses, an argument that quickly drew criticism from his Republican opponents.

Obama is trying to build more public support for a broad healthcare overhaul after action stalled in the U.S. Congress this week and polls showed many Americans were skeptical about the $1 trillion program.

A major part of the healthcare debate has centered on small businesses, which are responsible for much of the hiring in the United States.

Democratic plans would require many small businesses to provide insurance for their employees or face a penalty. Some small-business owners worry that will add a punitive cost at a time when they are struggling to rebound from the recession.

At the same time, Republicans argue a proposed surtax on millionaires that Obama has backed could subject some small businesses to extra taxation.

Obama used his weekly radio address to insist that small businesses had a lot to gain from the healthcare overhaul, based on a report by the White House Council of Economic Advisers.

Small businesses, he said, would be able to purchase health insurance through an insurance exchange.

He described that as a marketplace where they can compare the price, quality and services of a wide variety of plans, many of which will provide better coverage at lower costs than the plans they have now.

Small businesses that choose to insure their employees will also receive a tax credit to help them pay for it. If a small business chooses not to provide coverage, its employees can purchase high quality, affordable coverage through the insurance exchange on their own, he said.

Low-income workers would qualify for a subsidy to help them cover the costs, he said.

'WHERE ARE THE JOBS?'

In the Republican response to Obama's radio address, Representative Cathy McMorris Rodgers said she believed small businesses would pay a steep price under the Democratic plans.

Because the Democrats' plan is bankrolled by a small business tax, more jobs will evaporate. We've lost more than three million jobs since the beginning of the year and Americans have every right to ask, 'Where are the jobs?' she said.

Senate Republican leader Mitch McConnell said, It's worth asking why small businesses -- which created about two thirds of the new jobs in this country over the past 10 years -- get hit so hard under these plans.

The Obama administration's push to sell healthcare reform to small-business owners comes as divided Democrats struggle to reach an agreement on the most sweeping healthcare legislation in decades.

In a conference call with reporters, Small Business Administration head Karen Mills said helping small businesses get insurance was critical to providing insurance to many of the 46 million uninsured.

At the moment, there are about 13 million of the uninsured who are employed by businesses with less than 100 people. That's about a third of the uninsured. So you really can't solve the problem of the uninsured unless you address this issue of access to affordable healthcare for small businesses, she said.

Christy Romer, head of the of the Council of Economic Advisers, said the current health system placed an unfair burden on small businesses and their employees.

Small businesses pay more for the same kind of coverage for their employees than big businesses, about 18 percent, and that has strong consequences, Romer said.

(Additional reporting by Ross Colvin; Editing by Peter Cooney)

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