Small to mid-sized businesses are facing increasing healthcare costs, leading to a significant number discontinuing health insurance coverage. A JPMorgan Chase Institute report highlights that about one-third of nonemployer and employer firms dropped insurance from one year to the next. Post-pandemic data from 2022 to 2023 showed around a quarter of small businesses ceased premium payments. Despite these cutbacks, a majority continued to operate, showcasing resilience under financial pressures. Rising healthcare costs are the prime factor in these decisions, prompting tough trade-offs for business owners.
Across our data, we have seen how small businesses manage with limited resources, suggesting that they often have to make difficult tradeoffs. Increasing health care costs can have that effect - we saw that the firms with the largest health insurance burden increases were the most likely to drop coverage.
The report showed that most small businesses that ceased paying health insurance premiums continued to operate in the years after. Among nonemployer firms, 89% continued to operate in the first year after discontinuing payments.
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