Introduction to Rising Health Insurance Premiums
Americans are bracing for a significant increase in health insurance premiums during the upcoming open enrollment season, with individuals, families, and small business owners facing substantial hikes. The rising costs of healthcare are particularly challenging for small businesses, which often operate on thin margins and struggle to provide affordable health benefits to their employees. According to data from the Kaiser Family Foundation (KFF), family premiums for small firms have increased by over 350% since 1999, with the average family premium climbing to $26,054 in 2025 from $16,977 in 2020.
Health care consistently ranks as one of the top concerns for small business owners, with 84% of respondents in a survey by Small Business for America’s Future expressing concern about their ability to afford healthcare in 2026 if the enhanced premium tax credits expire at year-end. The survey also found that nearly 40% of small business owners said premium increases would create severe financial strain and threaten their operations, while close to a quarter said they would be forced to drop employee coverage.
Government Shutdown and ACA Tax Credits
The ongoing government shutdown has raised concerns about the ability of lawmakers to push through major health care reform, including the extension of enhanced premium tax credits introduced in 2021. These credits, which were extended through the end of 2025 by the Inflation Reduction Act, have boosted the level of financial assistance available to eligible ACA marketplace enrollees. If the credits expire, many marketplace enrollees will lose their entire tax credit and face rising premiums, resulting in a “double whammy,” according to KFF.
Half of all marketplace enrollees are small business owners, self-employed entrepreneurs, or small business employees, and 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. The prospects for support are hazy, with Democrats pushing for the renewal of the temporary cuts and Republicans expressing concerns about the cost and potential fraud in the marketplace.
Small Businesses Lobbying Congress
Small businesses are calling on Congress to support health care reform, including the extension of enhanced premium tax credits and the passage of the CHOICE Arrangement Act. The bill, which was referred to the House Committee on Ways and Means in September, writes health reimbursement accounts into the tax code, giving small businesses more affordable and flexible health insurance options. The National Federation of Independent Business (NFIB) has expressed support for the bill, citing the significant increase in healthcare premiums for small business owners, which has risen over 120% since 2000.
President Trump has also suggested that Democrats and Republicans should join forces to find an alternative to the Affordable Care Act, which he described as a “disaster.” However, the National Small Business Association (NSBA) does not see a huge appetite for significant healthcare reform in Congress, with a spokesperson stating that “it’s not at the top of lawmakers’ list.”
Small Business Cutbacks to Worker Health Benefits
Amid rising health-care costs, some small businesses have had to pare back on worker health benefits, including increased employee contributions to their health plans, moving to an insurance plan offering more limited coverage, and cutting other employee benefits. According to Small Business Majority’s research, the consequence of reducing benefit offerings is that small businesses become less competitive with larger corporations for top talent, making it increasingly difficult to attract and retain employees.
Experts encourage small businesses to shop around for potential opportunities to save on health insurance costs, asking questions to vendors and insurers to ensure they are getting a plan that is appropriate for their population. Matthew Rae, associate director of the Program on the Health Care Marketplace at KFF, suggests that small businesses can “get creative about some of the offerings so you can better manage the cost of the plans.”
GLP-1 Weight Loss Drug Pharmacy Costs
Pharmacy prices are a significant driver of rising healthcare costs, with high-cost prescription drugs like GLP-1s being a major contributor. More than 57 million privately insured adults may qualify for GLP-1 drugs, and employer coverage of these drugs is expanding. However, recent surveying of the employer market indicates that many are considering cutbacks in this coverage given the costs, despite the acknowledged health benefits.
Smart Tip for Readers
To navigate the complexities of rising health insurance premiums, readers can start by exploring available resources, such as the Kaiser Family Foundation’s website, which provides detailed information on healthcare costs and trends. By staying informed and proactive, individuals and small business owners can make more informed decisions about their health insurance options and advocate for policies that support affordable healthcare. Read more about the rising health insurance premiums and their impact on small businesses Here
