Gladys Harrison runs Big Mama’s Kitchen and Catering, a business that’s been in her family for generations. Lately, she’s been grappling with soaring food prices and new notice that her health insurance premiums are about to skyrocket—nearly quadrupling.
“I can’t believe it’s happening all at once,” Gladys, 58, shared. She’s among the 24 million Americans who rely on the Affordable Care Act (ACA) for their health insurance. To cope with the rising costs, she’s even thinking of taking on more shifts at her restaurant and reducing her staff’s hours.
According to KFF, a health research foundation, nearly half of those enrolled in ACA plans are small business owners and their employees. In 2024, ACA premiums are expected to rise an average of 114% as enhanced tax credits from the pandemic expire.
These subsidies became a major topic as Congress dealt with a recent government shutdown. Some Senate Democrats joined Republicans to negotiate funding, but the future of these healthcare subsidies remains uncertain.
If Congress doesn’t act, Gladys will see her premium jump from just $23 a month to a much higher figure. Between paying her mortgage, medical bills, car loan, and everyday expenses, finding extra cash won’t be easy. Rising tariffs have also pushed ingredient prices up, further squeezing her profit margins.
“Four times what I’m paying now is a lot,” she insists.
Many small business owners share her concerns. Higher ACA costs could hinder their ability to attract talent, especially compared to larger companies with employer-sponsored plans. This could lead to fewer hires, reduced payrolls, or even business closures.
Kerri VanMeveren, another small business owner in Missouri, recently learned her monthly premium will jump from $129 to about $700. The ACA has been crucial for her over the past 11 years, providing necessary health coverage. “If I can’t afford my premium by January 1, I might have to close my business,” she said, which would affect her employees too.
Jonathan Gruber, an economist at MIT who helped design the ACA, notes that a blow to small businesses can ripple across the economy. “Small firms are vital for growth,” he states. Higher costs may also deter people from leaving secure jobs to pursue their own business ventures, limiting new job creation.
Gladys understands this dilemma well. “I can’t hire as many people as I want to,” she admits, feeling the weight of reduced hours on her staff’s families.
John Arensmeyer, founder of Small Business Majority, emphasizes that ending the premium tax credits will greatly impact small businesses. He estimates that about 20% of the 60 million people associated with this sector rely on ACA plans: “Financial pressure on small businesses often leads to fewer employees and lower contributions to the economy,” he warns.
The expiring subsidies cap premiums at 8.5% of household income for those earning above a specific threshold. Roughly 38% of individuals losing their subsidies are small business owners or self-employed. Cynthia Cox from KFF reflects on this disproportionate effect, noting that losing subsidies might force them to seek larger employers for insurance.
Unfortunately, small businesses have struggled to make their voices heard among lawmakers, especially Republicans, who often critique the ACA. Rhett Buttle, an advisor for Small Business for America’s Future, points out that varying impacts on businesses complicate the issue. Retailers with lower profit margins are more likely to be hit hard.
“The focus often lands on consumers, but we need to highlight the economic toll on small businesses,” Rhett argues, emphasizing the need for greater advocacy in Washington.
In this uncertain landscape, the fate of small businesses hangs in the balance as they navigate rising costs and changing policies.
For more information on these changes and their impact, you can visit KFF.org.
Source link
Health Insurance,Small Business
