Rising Premiums Force Many U.S. Small Firms to Drop Health Coverage
Escalating health-care costs are prompting a growing share of American small businesses to eliminate employee insurance, threatening hiring and investment.
Data from one outlet reveal that just 51% of companies employing 10 to 24 people provided health insurance in 2025, while 97% of firms with 200 or more employees did so. Leaders such as Elaine Parker of the Job Creators Network Foundation argue that skyrocketing premiums erode the slim profit margins of small firms, forcing them to forgo coverage and curtail expansion, equipment purchases, or hiring. They recommend allowing association health plans, which can pool risk and negotiate better rates, to ease the financial strain.
A National Federation of Independent Business analysis shows 98% of small employers with existing coverage fear unaffordable costs in the next five to ten years. Benefits consultants project a 9.5% rise in employer health costs for 2027, pushing average premiums above $19,000 per worker. The tightening budget also leads some businesses to drop specific benefits, such as GLP-1 weight-loss drugs, with Starbucks announcing the end of such coverage in October.
Why it matters
Health-care cost pressures on small firms could reduce job benefits and slow economic growth.
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