Small Business Owners Facing 114% Spike in Health Costs

For small business owners, the Affordable Care Act (ACA) is about to become less affordable.

As Bloomberg News reported Tuesday (Nov. 11), small business owners and their employees, as well as self-employed workers, make up almost half of the enrollees in ACA plans. Premiums for those plans, the report added, are projected to surge 114% on average in 2026 upon the expiration of COVID-era tax credits.

“It’s all of the things happening at once,” Gladys Harrison, owner of Big Mama’s Kitchen and Catering in Omaha, told Bloomberg.

According to the report, Harrison had been struggling to cover tariff-fueled increases to food prices before she got a notice in October that her health insurance premiums would nearly quadruple for 2026.

As the report noted, the future of the ACA subsidies is uncertain. They’d been central to the government shutdown standoff, and while there could be a vote to renew them, it’s still not guaranteed that the bill will become law.

Bloomberg spoke with several small business owners who said costlier ACA plans would make it tougher to attract talent, as the employer-provided health plans from larger companies would become more attractive. The higher costs might also lead to reduced hirings, job cuts, or even business closures.

“Part of the reason we like small, new entrepreneurial firms is because they’re engines of economic growth,” said Jonathan Gruber, chairman of the MIT economics department, and one of the architects of the ACA. He added that more expensive ACA premiums could also dissuade people from leaving larger companies to start their own firms.

“That’s costly for the economy,” he said.

In related news, PYMNTS wrote Tuesday about the role working capital plays in the health of small and medium-sized businesses (SMBs) during periods of uncertainty.

Research from the PYMNTS Intelligence report “How Retail Small Businesses Finance Survival in Uncertain Times” shows that half of SMBs depend on day-to-day sales or existing bank balances to keep operating. Almost one-third rely on personal credit cards when traditional financing is unavailable, and SMBs with dwindling revenues are more than four times as likely to lack access to cash as those with robust revenues.

“That fragility has set the stage for platforms that can embed financing directly into the commerce experience, meeting working capital needs at the point of transaction,” PYMNTS wrote, noting that recent earnings reports showed a “growing dependence on working capital extended by the very platforms that power their sales.”