Fewer than 1 in 3 small businesses now offer health insurance—down from nearly half just two decades ago. Amid skyrocketing premiums, many small employers have been priced out of offering coverage altogether, while others have elected to drop benefits in light of policy changes.
A new analysis from Take Command breaks down what’s driving the decline in small businesses offering health coverage, which industries and states have been hit hardest, and how some businesses are adapting with alternative solutions like HRAs.
Key Takeaways, With Data for New York State
- Coverage Rates Drop as Costs Climb: Just 30.1% of small businesses nationwide offer health insurance today, down from 47% in 2000—a decline that tracks closely with a 182% surge in premium costs over the same period.
- Premium Hikes Outpace Inflation: Since 2000, average annual premiums for small firms rose from $2,827 to $7,974—nearly 2.4x the rate of inflation.
- HRAs Are Gaining Ground: Adoption of Health Reimbursement Arrangements (HRAs) has nearly tripled since 2020, with more than 80% of employers offering them to provide benefits for the first time.
- Coverage Declines Across All Industries: Since 2009, every major sector has seen declines in small business health coverage, including wholesale trade (-17.6 percentage points), mining and manufacturing (-13.3 pp), and professional services (-13.2 pp).
- Small Business Coverage in New York State: In 2009, 50.1% of small businesses in New York State offered their employees health insurance. By 2023, this figure had fallen to 32.0%—a decrease of 18.1 percentage points, the 6th steepest decline in the country.
The full report covers all 50 U.S. states and the District of Columbia, with a detailed breakdown of changes in small business coverage rates since 2009, employee access to coverage, and average premium costs.
