Small Businesses Could See Rise in Health Insurance Costs, Government Shutdown Continues

(small.news) — Small business owners and their employees may see a rise in health insurance costs during open enrollment season this year, according to CNBC.

Healthcare is the second biggest expenses for small business owners, and when premiums increase, it hits smaller companies harder, CNBC reported. KFF data showed that premiums are up over 350% when compared to 1999. It also showed that, in 2020, the average family premium was $16,977. However, in 2025, that same premium was $26,054.

Healthcare Is One Issue That ‘Matters The Most’ To Small Businesses: CNBC Survey

A survey conducted by CNBC and SurveyMonkey revealed that healthcare was tied for second with Immigration as the issue that “mattered the most” to small businesses. The top issue? Jobs and the economy.

The founder and chief executive of Small Business Majority, John Arensmeyer, said in an email, “Any increase is challenging for small businesses because most small firms are already operating on thin margins.”

Government Shutdown and Its Affects

The government shutdown in the United States is making it difficult to get healthcare reforms through Congress. However, there are discussions around whether or not to extend enhanced premium tax credits, which would make healthcare more affordable on the ACA Marketplace.

These credits, which will expire this year if nothing is done, were created in 2021 and extended because of the Inflation Reduction Act. These credits helped those who needed more financial assistance, and also gave some middle-income enrollees the opportunity to be eligible for certain tax credits.

KFF officials said, “Since the introduction of the enhanced premium tax credits, enrollment in the ACA marketplace has more than doubled from about 11 to over 24 million people, the vast majority of whom receive an enhanced premium tax credit.”

If these credits aren’t renewed, some will still have access to different, smaller tax credits, but others will lose eligibility altogether. KFF called this a “double whammy,” since some would not only lose the tax credit completely, but they would also be responsible for the entirety of the premiums that are increasing.

Small Business Owners Make Up Half of ACA Marketplace Enrollees: Small Business Majority

Arensmeyer claimed that half of the enrollees on the ACA marketplace are small business owners, self-employed individuals, or small business employees. He said, “On the individual market, data shows that those who purchase their healthcare through the Affordable Care Act marketplace will see an average increase of 75% if the enhanced premium tax credits are not renewed.”

Congress has rejected many deals brought forward to extended these premium tax credits, and now, with the government being shutdown, it’s unclear what will happen next. According to CNBC, Republicans are worried about the cost and believe the marketplace is filled with fraudulent enrollees. Democrats, however, want to see these credits renewed and are concerned about the sticker shock that consumers could feel once these credits expire.

Small Business for America’s Future conducted a survey and found that 84% of small business owners and employees are worried about being able to afford healthcare in 2026 when those credits are no longer available. Nearly 40% of respondents claimed that these healthcare premium increases will create serious strain on their finances, which could affect their business operations.

About 25% of respondents said these increases would force them to stop offering employee healthcare plans.

Small Business Owners’ Message To Congress

Small business owners aren’t remaining quiet during this shutdown. The National Federation of Independent Businesses wrote a letter to Congress in October to advocate for small business owners.

In the letter, NFIB supported the CHOICE Arrangement Act, which will put health reimbursement accounts into the tax code. This will help small business owners by giving them more affordable options for healthcare. It would also give small businesses the option to use pre-tax money to pay for employee health insurance plans.

Tyler Dever, NFIB’s principal of federal government relations, said, “The average cost of a healthcare premium for small business owners has risen over 120% since 2000. This significant increase has forced small businesses to make difficult choices, including limiting or eliminating health benefits to their employees. This is not an outcome small business owners desire, as it can put entrepreneurs at a disadvantage when they are competing against larger companies to fill jobs.”

An Alternative To The Affordable Care Act

President Donald Trump has suggested that Republicans and Democrats should find an alternative to former President Barack Obama’s Affordable Care Act. According to The Hill, Trump said, “We have to fix health care because Obamacare is a disaster.”

Despite this, a spokesperson from NSBA, another small business advocacy organization, said healthcare reform is “not at the top of lawmakers’ list.”

Small Business Owners Forced To Make Changes

Research from Small Business Majority showed that small business owners are now being forced to make changes, which can include:

– Increasing employee contributions
– Moving to health insurance plans that offer less coverage
– Cutting other benefits from employees

“The consequence is that as small businesses reduce their benefit offerings, it becomes increasingly difficult for them to compete with larger corporations for top talent. As a result, access to quality, affordable health insurance isn’t just a cost issue for small businesses—it’s a labor issue as well,” Arensmeyer said.

There are other ways that small business owners can save. Matthew Rae, associate director of the Program on the Health Care Marketplace with KFF, explained, “Ask questions to your vendors and insurers to make sure you’re getting a plan that’s appropriate to your population. You can get creative about some of the offerings so you can better manage the cost of the plans.”