Many small businesses in the U.S. are finding it increasingly challenging to maintain health insurance coverage due to the ongoing affordability crisis. In 2025, only 51% of businesses with between 10 and 24 employees provided health benefits, whereas a substantial 97% of businesses with at least 200 employees did, as reported by KFF. Experts pointed out to the Daily Caller News Foundation that rising healthcare costs could hinder small business owners on Main Street from attracting new talent and making essential investments.
Elaine Parker, president of the Job Creators Network Foundation, emphasized that “soaring and swiftly rising health plan expenses are a significant burden for small businesses, which often operate on very narrow profit margins.” She noted that such expenses hinder productive investments in growth, equipment, or hiring, leading many businesses to have no choice but to eliminate health coverage altogether.
Parker also urged that policymakers should enable small businesses to collaborate in association health plans to negotiate better rates, share risks, and avoid expensive regulations resulting from the Affordable Care Act. She mentioned that association health plans offer enhanced flexibility and help reduce costly administrative tasks, which could significantly lower healthcare costs for small businesses and their staff.
According to Healthcare Insider, these association health plans can determine different monthly premiums based on risk factors, like age, gender, and industry specifics.
Health insurance costs have surged nationally, with average premiums for families increasing from $16,977 in 2020 to an estimated $26,054 in 2025 for employers with between 10 and 199 employees, based on KFF’s estimates.
Recent analysis from the National Federation of Independent Business (NFIB) also indicated that nearly all small businesses currently providing health insurance—98%—are worried about the potential for rising healthcare costs to become unmanageable in the next five to ten years.
Tyler Dever, NFIB’s Principal of Federal Government Relations, remarked that “small business owners wish to invest in their workforce, yet skyrocketing healthcare costs present one of the most pressing affordability challenges.” He pointed out that escalating health expenses have been the top issue for over four decades, with fewer small businesses able to sustain providing health benefits.
Dever noted, “Small businesses are the bedrock of the American economy; they shouldn’t be priced out of taking care of their employees. These drastic increases in health costs are not viable for the long run.”
Looking ahead, health costs are expected to keep rising into 2027. Aon, a benefits consultant, predicts a 9.5% increase in U.S. employer healthcare costs next year, pushing average costs beyond $19,000 for each individual worker.
Alexis D’Amato Falvey, senior director of federal government affairs at Small Business Majority, commented that the sharp rise in premiums leaves small businesses facing tough choices regarding healthcare coverage. “It’s become a no-win situation: maintaining coverage as costs rise can cut into profit margins, while dropping or significantly reducing coverage may make it harder to draw in and keep talented employees.”
She also mentioned that some small business owners who feel they cannot afford coverage might close their businesses and seek employment with others to secure critical benefits like healthcare.
Moreover, numerous U.S. companies are considering dropping coverage for GLP-1 weight-loss drugs as healthcare expenses rise, according to the Human Resources Association SHRM. Starbucks, for instance, has confirmed that it will discontinue coverage for weight-loss medications starting in October, as first reported by Business Insider.
