Health Costs Crushing Small Businesses
A ‘stunning’ 78% of NC small businesses don't offer health insurance to employees, nearly double the national average
In recent weeks, we’ve examined how North Carolina’s exploding health costs threaten to neuter the value of tax cuts and harm the state’s enviable business environment. We learned that:
Health insurance premiums in North Carolina are higher than neighboring states by double digits.
North Carolina’s health costs have grown at the sixth-highest rate in the country since 1980.
Workers in North Carolina pay the second-highest price in the country for employer-sponsored family health insurance plans, and cost increases have doubled the national average since 2015.
Today, we’re talking about the employer side of things.
Some of the most punishing impacts of the health care cost crisis are borne by North Carolina’s nearly one million small business owners, dubbed the “backbone” of the state’s economy. Small businesses account for 99.6% of North Carolina businesses, employing 45% of workers in the state’s private sector.
Yet 8 in 10 small businesses in North Carolina don’t even offer health insurance, largely due to cost, according to Small Business for America’s Future — a “stunning” figure, the organization notes. That’s nearly double the national average of 44% of small businesses that do not offer health insurance to their employees.
The organization’s recent survey of North Carolina’s small business owners sounds the alarm:
78% don’t offer health insurance to their employees. For a majority, cost drives that decision.
76% say health care costs impact their business bottom line. Operations impacts include growth and hiring limitations, and price increases for goods or services.
The employers that do offer health insurance have shouldered double-digit cost increases. Between 2013 and 2022, for instance, the average annual cost to employers for employee health insurance rose 42% for single coverage and 19% for family plans.
Insurers aren’t picking on North Carolina businesses, big or small. Instead, they’re setting premiums based on soaring health care costs, driven, in part, by burdensome health care regulations.
Nationwide, 98% of small business owners who offer health insurance are “concerned that the cost of providing health insurance to their employees will become unsustainable in the next 5-10 years,” according to the National Federation of Independent Business.
Source: Survey data from the National Federation of Independent Business and Small Business for America's Future.
In addition to its other well-deserved accolades, North Carolina has been heralded as a standout for small business employment growth. North Carolina’s uniquely high and growing health costs threaten that success.
In the next few weeks, we’ll offer our policy recommendations to try to help resolve this out-of-control problem.
