The Problem with Health Insurance Plans for Small Businesses: High & Rising Costs for Employee Health Care

Despite the passage of the Affordable Care Act a little over a decade ago (and, in part, because of it!), the cost of providing much-needed health benefits for workers and their families continues to steadily accelerate. 

2023 saw average employee health care costs reach a new record of $15,013. And costs are projected to increase another 7.4 percent in 2024.

In prior years, employers responded to health insurance cost increases via increasing “cost sharing” with workers. This is a euphemism for passing more and more costs onto workers themselves:

• Workers had to take on an increasing share of health insurance premiums
• They had to take on more risk in the form of higher deductibles
• They had to pay more in co-insurance, co-pays, and other costs

And in some cases, employers don’t provide any health insurance coverage at all. For example, rank and file employees in unskilled labor-intensive businesses like restaurants receive little or nothing at all in the form of health benefits.

Others rely on part-time workers and don’t extend health benefits except to the inner core of ownership/management.

But those options aren’t realistic in today’s tighter and more competitive labor market. The best talent has options, and they are demanding more in terms of health benefits. 

It is very difficult for small employers to recruit and retain the help they need without offering a competitive health benefits package. 

There is A Better Way