Obamacare vs. Trumpcare: What’s the Best Solution for Small Businesses?

Obamacare vs Trumpcare, Which is Worse Small Businesses? What About Single Payer?

Obamacare vs Trumpcare, Which is Worse Small Businesses? What About Single Payer?

Health coverage for everyone is a goal that most can agree on, but that is where agreement stops. President Donald Trump is pushing for repeal and replacement of The Affordable Care Act, more commonly referred to as Obamacare.

The problem is his American Health Care Act (AHCA) proposal is worse for small businesses and the working classes than the Affordable Care Act (ACA) was. This is why it is also dubbed Ryancare and Obamacare 2.0.

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Obamacare vs Trumpcare, Which is Worse Small Businesses?

It reduces coverage and gives the wealthiest tax breaks. This is going in the wrong direction.

SmallBizTrends quoted White House press secretary Sean Spicer about the ACA in a briefing:

Right now there is an uneven playing field. It is those self-employed individuals and small businesses that are paying the penalty for this. They’re the ones who suffer right now. By giving them more options and driving down cost, we’re leveling the playing field.

Because the AHCA benefits the most wealthy at the expense of small businesses and the working class even more than the ACA, we need a different solution.

Small Business Deals

The single payer system, also referred to as “Medicare for All”, shows the most potential for solving the challenges of providing universal health care.

What Is a Single Payer System?

According to this analysis of the pros and cons of a single payer system:

A single-payer system is an insurance arrangement whereby one party is responsible for paying for the costs of health care and the structure of how much money is collected to pay for the costs incurred.

Medicaid and Medicare are single payer systems. Either the federal or state government would manage health insurance under a single payer system.

Socialized medicine is different because a single payer system only impacts how health care is paid for and not who provides it.

How Does a Public Option Differ from Single Payer?

According to FactCheck.org:

The “public option” is a single federal insurance plan that would compete with private insurance companies.

Their analysis indicates that some believe a public option would spur competition among insurance companies. Others feel it could compete unfairly, driving insurance companies out of business.

As insurance companies have very strong lobbies, they would probably be able to shape any public option that was implemented. Public option insurance plans are unlikely to drive corporations selling insurance out of business.

Pending “Medicare for All” Alternatives

Single payer health care plans are typically referred to as “Medicare for All”. This is the same type of coverage Bernie Sanders has long advocated.

Ninety-three percent of Americans feel health care is important or very important. But 7 percent do not, and that 7 percent are probably among the youngest and healthiest. If they choose not to participate, costs are higher for everyone else.

Obamacare vs Trumpcare, Which is Worse Small Businesses?

National: Medicare for All: HR676

The House of Representatives introduced The Expanded and Improved Medicare for All Act on January 24, 2017. It has 65 cosponsors, all Republicans.

Medicare for All alternatives eliminate the employer mandate and penalties imposed by Obamacare. According to the Act linked above:

“The program is funded from existing sources of government revenues for health care by:

  1. increasing personal income taxes on the top 5 percent of income earners
  2. instituting a progressive excise tax on payroll and self-employment income
  3. adding a tax on unearned income
  4. instituting a tax on stock and bond transactions.

Amounts that would have been appropriated for federal public health care programs, including Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), are transferred and appropriated to carry out this bill.”

This video provides an example of how the government would fund “Medicare for All”:

California, Colorado, New York and Vermont on Single Payer

Vermont bailed on single-payer health care when the tax costs to finance it were more than their small state could afford.

Trump and a Republican-controlled Congress may have unintentionally removed the main obstacle preventing California from switching to their version of “Medicare for All”.

California, Colorado and New York have Medicare for All bills pending and many additional states have proposed them. A federal plan is more likely to be financially stable, but harder to pass.

Obamacare vs Trumpcare, Which is Worse Small Businesses?

GOP Plan: American Health Care Act (AHCA)

The main complaint against the AHCA is that it would repeal taxes on the wealthy that the government uses to cover the costs of Obamacare.

Individual and Employer Mandates are abolished under the AHCA according to the video in this post. Comments from the main insurance industry groups indicate concerns over AHCA cuts in Medicaid funding.

Brookings states that repealing ACA taxes will exhaust Medicare Trust funds four years sooner.

Health Care Cost Impacts on Small Business

Uncertainty about what will replace it has brought back debates over the best form of health coverage. It is partially known how Obamacare aka the ACA impacted small business:

American Action Forum (AAF) research finds that Affordable Care Act (ACA) regulations are reducing small business (20 to 99 workers) pay by at least $22.6 billion annually. In addition, ACA regulations and rising premiums have reduced employment by more than 350,000 jobs nationwide, with five states losing more than 20,000 jobs.

What small business most definitely does not need is a replacement that costs even more jobs or reduces employee pay even further.

Coverage Many Cannot Afford to Use

We also need to consider affordability as well as coverage. What good is having coverage if you cannot afford to use it because of high deductibles and premiums?

Measuring how many have coverage should include measuring whether they can afford to use it.

Forcing low income workers to pay for insurance does not equate to better health care because doing so may cause them to seek even less medical care than they did before they had to buy it.

Sadly, people who can afford insurance have told me that forcing the poor to pay “their share” so their own premiums are lower is what matters to them.

Subsidies vs ACHA Tax Credit

With subsidies under the ACA, consumers get a stipend to help pay their monthly premiums. It makes insurance more affordable when they need to pay for it.

A tax credit, like that proposed in the AHCA, comes at tax time. It can help mitigate your taxes in the end, but it doesn’t help the monthly affordability.

If you can’t pay your premium, you can’t get health insurance anyway, even if there is a (meager) credit at the end.

Seriously Consider Tiered Coverage

Americans either cannot afford or choose not to prioritize spending what it would take to have universal health care. Vermont did not move forward with their single payer plan because they knew people would not pay the tax rate it required.

Americans pay vastly more for health care than people in other countries. So either we need to find a way to push that cost down or we need to accept more limited insurance plans.

According to this older list of 33 industrialized countries, almost half (16) of them have single payer systems. 9 have two tiered systems which provide limited basic health care and offer more coverage for an additional cost.

Has anyone ever seen a discussion about providing universal emergency health care that only covers injuries and acute illnesses? Making only this mandatory would be vastly more affordable.

Those who can believe in and can afford advanced health care treatments for chronic illnesses could then choose to pay for additional insurance to cover the costs.

Whatever we do, it is clear from statistics such as the graph below that the United States is trailing far behind other countries in getting results from our health care systems.

Courtesy of: Visual Capitalist

Repealing Obamacare without having an immediate replacement would definitely be unwise. Brookings lays out the proposed alternatives and provides details on what a workable replacement plan should entail.

Image: Speaker.gov 8 Comments ▼

Gail Gardner Gail Gardner is a staff writer for Small Business Trends as well as the Community Manager at BizSugar. She is also the Small Business Marketing Strategist who founded GrowMap.com and co-founded the Blogger Mastermind Skype group. She mentors small businesses and freelancers, especially writers and social media marketing managers.

8 Reactions
  1. Totally agreed. The single payer system is the most logical way forward here. It actually boggles the mind why this isn’t being proposed in congress.

    • I saw a survey on Twitter today that showed 80 or 90% of Americans support a Single Payer solution. The person who started the survey probably has followers who agree with them on that, but at least we know that many do realize that is the only thing likely to work.

  2. I really loved the section about how ‘single payer’ differs from ‘public option’. Very clear now. Thanks.

    There’s one section I’m confused by: “Forcing low income workers to pay for insurance does not equate to better health care because doing so may cause them to seek even less medical care than they did before they had to buy it.” Wouldn’t they be more inclined to go to a doctor or hospital on a more regular basis if they see via their paystubs that insurance takes a bite out of their earnings every month?

    I still feel lotto revenue can be utilized to help fix this mess. Being that Donald is from the world of casinos and gambling, he should have no issue with this. And I don’t mean divert from The Department of Education and other beneficiary departments; I’m saying expand the lotto games, increase the excise tax but restructure the games so that they’re easier to win; then use the expanded (again, expanded, not diverted) revenues and taxes to HELP fix this national healthcare mess. It won’t solve the issue but it’ll help. And it’s not just Trump who’d be fine with the idea. Wealthy people would be fine with the idea too because they don’t play lotto games. As it stands, in New Jersey, only 2 percent of lotto revenue goes toward education. Where does the other 98 percent go? If the answer is “for daily administrative X”, then that’s the height of inefficiency.

  3. Hi Alex,

    You asked whether they would go to the doctor more often simply because money comes out of their earnings every month. They can’t if they don’t have the money to cover the co-pays and deductibles. Obamacare forced people to pay for coverage they couldn’t afford and then cannot use.

    Trumpcare is worse. It removes the funding Obamacare imposed on the wealthiest people, takes money away from Medicaid, and provides tax credits instead of subsidies. This will cause an even lower percentage of people to want to pay for health care.

    The only way to provide health care for everyone is to get all the healthy people involved instead of only the oldest and sickest. The obvious way to do that is with Single Payer plans funded by payroll and other types of taxes on both employees and businesses.

    But as Vermont found out, because American health care costs are so much higher than in other countries, the tax burden to support it was higher than they could convince people to pay. We either have to drive down the costs of healthcare and prescription drugs or limit coverage or both.

    The least expensive way to provide coverage to all is to cover injuries and acute emergencies using a two-tier system. That could also cover preventive care. Then those who want more advanced coverage will have to be willing to pay for a second, more comprehensive tier.

  4. Have you looked into the work by the ad-hoc association, Americans for Free Choice in Medicine? Real privatization is the only solution.

    • Hi Martin,

      While it is true that the federal government has way overstepped their designated responsibilities, unless we can rein in the extent to which corporate money has corrupted how the economic and health care systems work, how do they think free choice in medicine would work?

      Corporations in medical fields, big pharma, and insurance have driven the prices to the sky. At the same time, there are fewer jobs that pay a living wage, more underemployed, and more unemployed. Only the wealthy can afford medical care now. And if the majority cannot even afford insurance, the few who can afford it now won’t be able to continue buying it. If they do, they may not be able to come up with the co-pays to actually use it.

      The reason single-payer is what is most likely to work is that more people would be paying less to cover everyone. But even then, we must limit coverage to emergency care and acute illness. We might be able to afford preventive medicine. It is unlikely that elective surgery, cancer treatment, or any other high dollar care would be covered. That is why there needs to be a two-tier system so those who want those treatments can pay for them separately.

      Let’s say what they propose (total free choice) happened. Here’s a real-life scenario: someone trapped in a car on the highway after an accident. What do we do? Leave them in the car until they can prove they have insurance or the means to pay? What if they’re unconscious?

      The cars have to be moved. Something has to be decided. Do you just haul them to the junk yard with the car? Or send them to a warehouse for people who can’t prove they can afford medical care?

      What would they do for a teenager with a ruptured appendix? Or a woman in the middle of childbirth with complications? Or an elderly person whose hip just gave out? Leave them where they fall? As humans who care about others we have to have some standard for dealing with emergencies.

      While I agree with many tenants of Libertarianism and believe we need smaller government, there are things we collectively agree to finance: roads, fire departments, schools. Emergency care would be one of those things we have to deal with so we may as well collectively agree to them for the good of all.

  5. Guy Hohenstein

    Thanks for the article explaining the nuances of our complicated healthcare system. my concerns are at a higher level; fraud and abuse run billions of dollars yearly with little end in sight. Allowing the Federal government to operate our healthcare system will only increase this fraud and abuse with no plan to stop it. Our life styles consisting of fast foods and chips is a disaster and it’s getting worse all the time. Watching TCM movies from the 30’s and 40’s it’s apparent the sleek thin bodies of these periods are a result of our diet as well as the bodies you see in the malls today where it is difficult to see a thin trim person. My point is we will never catchup in healthcare unless we change this aspect of life, diabetes, kidney failure, heart disease will sink our health care. Your chart of country longevity vs healthcare expenditure looks to include this dietary difference but not mentioned specifically. I see advertisements for drug addiction clinics to help solve our dependency but what is really needed is to reduce the amount of these drugs in our country to reduce the amount of users and give our youth purpose for not using drugs. I see little chance of improving our healthcare system and costs without addressing these systemic issues.

    • Hi Guy,

      Yes, your concerns are all valid. Government rarely does a good job of managing anything because the way it operates punishes the people who care enough to complain and rewards those willing to look the other way. That is unlikely to change.

      Remember that media (TV, movies, advertising, etc.) is not an accurate representation of typical people. Only the thinnest, most beautiful people tend to be portrayed and not ordinary people or a cross-section of reality.

      As long as people continue to consume the packaged “food” laden with high-fructose corn syrup (HFCS) and GMO everything, they cannot be healthy. There is so much money being made off of feeding people junk and then adding to their ill health with prescription medications that there is only one solution: consumers.

      Consumers have to choose to change what they’re buying. But if enough of us do change, pressure to put alternative, healthy food sources out of business will increase. At some point, each person who cares enough to be healthy will need to be responsible for growing real food for themselves.

      The majority will continue to eat what is easily obtained and cheap. They will also continue to look for a solution in a pill. We can already see where that path leads, and it will lead their faster and faster in the future.

      The only way health care can be made affordable is for it to only cover emergencies (broken bones, car accidents) and not cover chronic health conditions.