House Minority Leader Hakeem Jeffries (D-N.Y.) speaks at a press conference on health care with other House Democrats on the east steps of the U.S. Capitol on October 15, 2025, the 15th day of the government shutdown in Washington, DC.
Anadolu | Anadolu | Getty Images
Americans will experience sticker shock with higher premiums for individuals and families this health insurance recruitment season, but there will be little relief for small business owners and their employees on Main Streets across the country. Small business advocates are seeking support from Congress, but the outlook for aid is uncertain at best.
Healthcare costs are the biggest expense for small businesses after payroll, and increases in healthcare costs tend to hit small businesses especially hard. As an example, small business family insurance premiums have increased steadily over the past 20 years. That’s an increase of more than 350% since 1999, according to data from KFF, formerly known as the Kaiser Family Foundation.
It’s true that insurance premiums for large companies are also rising, but small and medium-sized businesses are generally feeling the pinch more acutely. According to a recent report from KFF, the average family premium for businesses with 10 to 199 employees rose from $16,977 in 2020 to $26,054 in 2025.
According to the CNBC|SurveyMonkey Small Business Survey, healthcare consistently ranks in the top three “most important” issues for small business owners. Immigration and health care are virtually tied for second and third place, with only “employment and the economy” at the top.
“Any increase is difficult for small businesses because most of them are already operating on thin margins,” John Arensmeyer, founder and CEO of the business advocacy group Small Business Majority, said in an email.
Government Shutdown and ACA Tax Credits
The month-long government shutdown doesn’t give us much confidence that lawmakers will be able to push through major health care reform. Still, certain aspects of health reform are being debated, including whether to extend the expansion of premium tax credits meant to make health care more affordable through the Affordable Care Act (ACA) markets. These credits are scheduled to expire this year.
These credits were introduced in 2021 and later extended through the Inflation Control Act until the end of 2025. Enhanced tax credits increase the level of financial assistance available to eligible ACA Marketplace enrollees. Middle-income enrollees with incomes above 400% of the federal poverty guidelines also qualify for premium tax credits.
According to KFF, “Since the introduction of the enhanced premium tax credit, the number of enrollees in the ACA marketplace has more than doubled from approximately 11 million to more than 24 million, the vast majority of whom received the enhanced premium tax credit.”
When these credits expire, many Marketplace enrollees will remain eligible for a small tax credit, but other participants will no longer be eligible. According to KFF, these enrollees will be hit with a “double whammy.” They would lose their entire tax credit and be responsible for higher premiums.
Arensmeyer said half of Marketplace registrants are small business owners, self-employed entrepreneurs, or employees of small businesses. “In the individual market, data shows that if the enhanced premium deduction is not renewed, the number of people purchasing health care through the Affordable Care Act marketplace will increase by an average of 75%,” he wrote.
It’s hard to say how things will pan out, as several deals extending enhanced insurance tax credits have already been rejected and the government shutdown continues. Broadly speaking, Democrats want to reinstate the temporary cuts and are concerned about sticker shock when loans expire, while Republicans are generally concerned about their costs — they believe they are helping people with too high incomes and say the market is rife with “fraud.”
One notable exception is Rep. Marjorie Taylor Greene (R-Ga.), who has expressed frustration with Republicans’ lack of legislation to replace the Affordable Care Act and tax subsidy issues.
Meanwhile, small businesses are exposed to crosswinds. A survey of 620 small business owners conducted by the advocacy group Small Business for America’s Future found that 84% of respondents are concerned about their ability to pay health care costs in 2026 if tax credits expire at the end of the year. According to the survey, nearly 40% said that increasing insurance premiums would cause a severe financial burden and threaten their business operations. Nearly a quarter said they would be forced to eliminate insurance for their employees.
Small businesses lobby Congress
Small businesses are asking Congress to support health care reform in other ways. In October, NFIB, a nonprofit organization that advocates for small businesses, sent a letter to Congress supporting the CHOICE Arrangement Act. According to the NFIB, the bill would bring medical reimbursement accounts into the tax code and provide more affordable and flexible health insurance options for small businesses. There is also an exemption for small businesses that allows them to pay for employee medical expenses with pre-tax funds.
“The average cost of health insurance premiums for small business owners has increased more than 120 percent since 2000,” wrote Tyler Deaver, director of federal government relations at NFIB. “This significant increase is forcing small businesses to make difficult choices, such as limiting or eliminating health benefits for their employees. This is not the outcome that small business owners want, as it could put entrepreneurs at a disadvantage when competing with larger companies for job security.”
The bill was referred to the House Ways and Means Committee in September. A version of this bill has also been referred to the Senate Finance Committee.
Separately, President Trump recently suggested that Democrats and Republicans should work together to find an alternative to the Affordable Care Act, which was passed during President Obama’s administration. “We have to fix health care because Obamacare is a disaster,” Trump told reporters on Air Force One on his way to South Korea, The Hill reported.
Still, the small business advocacy group NSBA doesn’t think there’s much appetite in Congress for major health care reform. “He is not at the top of the list of MPs,” the spokesperson said.
Small businesses cut employee health benefits
As medical costs continue to rise, some small and medium-sized businesses are being forced to make cuts. A study by Small Business Majority found that small businesses are making changes such as increasing employee contributions to health insurance, moving to insurance plans that offer more limited coverage, and cutting other employee benefits.
“As a result, as small businesses cut benefits, it becomes increasingly difficult for them to compete with large companies for top talent,” Ahrensmeyer wrote. “As a result, for small businesses, access to quality, affordable health insurance is not only a cost issue, but also a labor issue.”
There’s not much small businesses can do to keep costs down other than looking at or reconsidering the benefits offered to employees. Still, Matthew Ray, associate director of KFF’s Healthcare Marketplace Program, encourages small businesses to explore potential savings. “Ask your vendors and insurance companies to make sure you’re getting the right plan for your people,” he said. “You can get creative with some services to better control the cost of your plan.”
Pharmacy costs for GLP-1 weight loss drugs
According to HUB International’s 2026 Benefit Cost Trends Report, pharmacy prices are a major driver of cost increases, with high-priced prescription drugs such as GLP-1 being the main driver.
More than 57 million adults with private insurance may be eligible for GLP-1 drugs such as Ozempic, Wigovy, Zepbound and Munjaro, and employer coverage of GLP-1 drugs is expanding, according to KFF. According to the International Employee Benefits Fund, 55% of employers cover GLP-1 for diabetes, and 36% cover both diabetes and weight loss.
Although coverage for GLP-1 prescriptions is much more common among large employers than small businesses, a recent KFF survey of the employer market (companies with fewer than 200 employees was not surveyed) shows that despite the widely recognized health benefits, many are considering reducing this coverage due to cost considerations.
