Op-Ed: Health insurance crisis facing America's small businesses

Small businesses are the foundation of the U.S. economy, creating jobs and driving innovation.

Main Street is always resilient, weathering recessions, navigating shifting regulations, and adapting to market disruptions. But today, they are facing a crisis that has been growing for decades – one that threatens their viability and the wellness of the millions of Americans they employ: the crushing cost of health insurance.

Health insurance costs have been the No. 1 concern for small business owners for nearly 40 years, and we are now at a breaking point. The small-group insurance market is in freefall, premiums are unsustainable, and small businesses are being forced to make difficult choices.

Small businesses are paying more and getting less. Unlike large corporations, small businesses lack the bargaining power to negotiate lower premiums.

The result? They pay twice as much for health insurance as big businesses, often without receiving greater quality for the price.

And with inflation driving up operational costs across the board, many are forced to make painful choices. Some are raising prices, cutting profits, and too many are dropping coverage altogether making them less competitive when it comes to attracting and retaining talent.

A new report from the National Federation of Independent Business underscores the severity of the problem.

The average small business single plan premiums have increased 120% in the last two decades, while average family plan premiums have increased by 129% for firms with 50 or fewer employees. These rapidly rising costs are crippling for small businesses.

Today, only 30% of small businesses offer health insurance, down from nearly 50% in 2000. That number is on track to continue declining, with 98% of small businesses uncertain if they can continue offering health insurance in the next five years.

Crisis made worse by Washington

The rising cost of health insurance isn’t an accident – it’s a direct result of policies that have made it harder for small businesses to compete in the marketplace. Layer upon layer of regulations, mandates, and red tape has pushed premiums higher while limiting the ability of smaller employers to access flexible, affordable coverage options.

Meanwhile, government restrictions on affordable coverage options – such as essential health plans and Short-Term Limited Duration Insurance have made it harder for small employers to offer personalized lower-cost alternatives to traditional insurance.

Policymakers have an opportunity to deliver real relief for small businesses and alleviate the burden small business owners face when it comes to health insurance costs.

The first step is protecting employer-sponsored coverage. That means rejecting any proposals that would weaken the tax exclusion for health benefits and protecting the ability for employers to self-insure.

Another opportunity for Congress is to expand affordable coverage options dramatically. Essential health plans, innovative arrangements like Direct Primary Care and short-term plans can provide significant benefits for small business owners by increasing offerings and flexibility, addressing gaps in coverage, and promoting much-needed personalization, focusing on prevention and wellness rather than sick care.

Finally, Washington must empower small employers with increased financial choice and control over their health care decisions. By expanding access to tax-free savings accounts and enforcing real price transparency in the health care system, small businesses can make informed decisions when hospitals, insurers, and Pharmacy Benefit Managers hide the true cost of care behind opaque pricing structures.

The rising cost of health insurance continues to strain small businesses, who already face an uphill battle when competing with larger corporations. The current trajectory of health insurance costs for small employers could lead to severe consequences for the broader economy, federal spending, and the overall health of the small business economy.

Without immediate and targeted policy reforms, millions of Americans may lose access to affordable employer-sponsored health coverage. Congress must act now to give small business owners and their employees greater choice and control over their health care coverage decisions. Doing so will enhance the vitality of small businesses and communities nationwide, which are the foundation of the U.S. economy.