With American Rescue Plan Heading Toward Final Passage, New Small Business Survey Shows Healthcare Costs are the Next Big Challenge Needing Solutions


Conan Knoll
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National survey of more than 800 small business owners finds 55% of small business owners say the cost of providing health insurance to their employees is the biggest challenge they face, ahead of taxes, competition from large corporations, and even Covid-19 and support a broad set of policy solutions to bring down costs 

Washington, D.C., March 9, 2021—Small Business for America’s Future today released a national survey of small business owners that found the cost of providing health insurance to their employees is the biggest challenge they face—even ahead of the challenges associated with Covid-19—and that small business ownersoverwhelmingly want government action to relieve the burden and strongly support a broad array of policy solutions to help rein in the costs.

With reason to hope the end of the pandemic is coming and the American Rescue Plan is in place, its time lawmakers begin working on other pressing issues to help small businesses recover, rebuild and thrive. Chief among those is the cost of healthcare.

This survey shows small businesses believe there is an urgent need for reform. A whopping 92% of the 827 small business owners surveyed said its important that the Biden-Harris Administration and Congress take action to bring down healthcare costs and support a range of solutions, from capping out of pocket patient expenses (87% support), requiring hospitals and physicians to publicly disclose their negotiated payment rates (86% support), and adopting policies that eliminate anti-competitive behaviors that extend brand drug monopolies (88% support), and giving everyone the option to purchase a government-sponsored health plan like Medicare (69%).

“Healthcare costs have been a problem for small businesses for years, but given the strain from the pandemic they’re now at a breaking point when it comes to healthcare. The challenges of healthcare costs and the pandemic are likely linked, with Covid shining a light on the flaws in the healthcare system while eating into companies’ revenues and therefore their ability to offer their employees health insurance,” said Frank Knapp, Jr. Co-chair of Small Business for America’s Future and President and CEO of the South Carolina Small Business Chamber of Commerce. “They are absolutely desperate for solutions, and in fact, respondents were more concerned that lawmakers wouldn’t go far enough in acting to bring down health care costs than those who were concerned they would go too far.”

Half of small business owners reported providing health insurance as a benefit, but an overwhelming 76% of the small business respondents that do not provide coverage say it’s because the cost of doing so is too high. In addition, 53% of small business owners who do offer insurance said they have considered dropping it because of rising costs.

This is not surprising when you consider nine in 10 survey respondents said their health insurance costs have increased over the past four years with 40% saying that costs have risen by 10% or more a year.

“Health insurance is an expense you can’t do anything about. The pandemic hammered demand and our revenues are down 60% but health coverage costs are the same,” said Mike Roach, who owns Paloma Clothing in Portland, Ore. “A lot of landlords have been willing to be flexible and help small business owners during hard times, but the insurance companies aren’t giving any breaks on health insurance premiums.”

When asked about where the responsibility for high insurance costs lies, small business owners were unsparing—none of the groups tested were found blameless. Small business owners said pharmaceutical companies (93% of small businesses held responsible), health insurance carriers (92%) and hospitals (91%) topped the list of groups responsible for high costs.

Health expenditures reached $3.8 trillion in 2019 and are expected to rise to $6.2 trillion in seven years. Those rising costs are a serious threat to Main Street small businesses and therefore our economy and society.

“How much more could small businesses do if freed from the crippling costs of healthcare in a market skewed against them?” said Knapp. “It’s time policymakers take decisive action to help our Main Street entrepreneurs and consider all options to bring down costs.”

View the full survey report here.


About Small Business for America’s Future
Small Business for America’s Future is a national coalition of small business owners and leaders working to provide small businesses a voice at every level of government. We’re committed to ensuring policymakers prioritize the nation’s 30 million small businesses to create an economy that works for them, their workers and their communities. Visit www.smallbusinessforamericasfuture.org. Follow us on Twitter and Facebook. #SmallBizAF.

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