Double-Digit Premium Increases May Force Half of Michigan Small Businesses to Drop Healthcare Benefits
Blue Daily
| 3 min read
For years, small business advocates in Michigan have warned rising healthcare costs were becoming unsustainable. New survey data from the Small Business Association of Michigan (SBAM) suggests many employers may now be at a tipping point.
More than half of Michigan small businesses say they may be forced to reduce or eliminate healthcare benefits because of rising costs, according to a recent SBAM survey highlighted by both SBAM itself and DBusiness Magazine. The findings underscore a growing issue that extends beyond households and into Michigan’s broader economy.
The survey of roughly 300 small business owners found 51% have already reduced or eliminated benefits due to rising healthcare costs, while 76% said the cost of providing coverage is affecting their ability to hire new employees. Most respondents also said health insurance costs are limiting investments in other areas of their businesses.
These concerns have been bubbling for years.
Last year, SBAM survey results revealed that 76% of small business owners said the cost of providing healthcare is affecting their ability to hire more employees. Michigan small businesses have consistently described healthcare affordability as one of their top business challenges, particularly as employers face back-to-back premium increases and higher pharmacy costs.
“Someone must pay the increased cost of healthcare, and in Michigan, it seems small businesses owners are bearing the brunt of it, with double-digit cost increases,” said SBAM President and CEO Brian Calley. “Some employers have seen an increase of as much as $2,000 per employee, per year.”
SBAM’s Board of Directors called attention to the healthcare affordability crisis in an open letter in April, when it asked those who oversee the healthcare system to work harder to minimize cost increases that are being passed downstream onto small business owners.
Healthcare costs have become an economic issue
Digging deeper into the survey, more than 90% of survey respondents said offering health insurance remains valuable for employee retention and satisfaction. At the same time, 84% said health insurance and employee benefit costs represent a significant share of their overall business expenses.
That tension is becoming harder for many employers to manage. Small business leaders interviewed in the reports discussed how unpredictable premium increases make long-term planning difficult, forcing owners to reconsider hiring plans, expansion opportunities and benefit offerings.
The issue is not unique to Michigan. National reporting has also shown smaller employers are disproportionately affected by rising healthcare costs because benefits consume a larger percentage of payroll and operating budgets compared to larger companies.
Still, Michigan’s small business community is increasingly vocal about the need for solutions. SBAM has called for greater price transparency, increased competition in healthcare markets and policy changes designed to improve affordability for employers and workers alike.
Healthcare affordability conversations like these aren’t likely to die down as businesses prepare for future premium increases and policymakers debate ways to control healthcare spending. But for many Michigan small businesses, drastic business changes may already be imminent, as some choose between continuing to offer employee benefits or trying to grow and keep hiring.
Learn more about what Blue Cross is doing to address healthcare affordability at bcbsm.mibluedaily.com/affordability.
Photo credit: Getty Images
