Rising Health Insurance Costs and Taxes Top Concerns for Small Businesses

On Wednesday, August 21st, a new report from the National Federation of Independent Business (NFIB) revealed that the rising cost of health insurance continues to be the number one concern for small businesses across the United States. This issue, which has been the top concern since 1986, is exacerbated by additional challenges, including high federal and state taxes, burdensome regulations, and inflationary pressures.

Small business owners nationwide, including those in New York, are struggling to provide affordable health insurance to their employees. The NFIB report, which surveyed over 40,000 small business owners, found that health insurance costs are particularly burdensome for smaller businesses due to their limited purchasing power in the small group market. This challenge is further compounded by increasing costs of care and new legislation mandating additional benefits, particularly in states like New York.

Ashley Ranslow, New York State Director for the NFIB, highlighted that while health insurance costs are a consistent issue nationwide, New York small businesses also face additional challenges. Taxes on business income rank as the third highest concern in New York, compared to ninth nationally. Other issues that rank higher in New York include unemployment insurance, workers’ compensation, and the cost of utilities such as gas and electricity.

Eric Linzer, President and CEO of the New York Health Plan Association, warned that the situation could worsen if the New York Health Act, which proposes a single-payer healthcare system, is passed. Linzer argues that this would significantly increase taxes on employers and consumers, with estimates suggesting an additional $250 billion in costs. However, supporters of the New York Health Act, including State Senator Gustavo Rivera, argue that a single-payer system would reduce overall costs for small businesses by eliminating premiums, co-pays, and deductibles.

The NFIB’s findings underscore the need for policymakers to address these ongoing challenges. Small business owners, like Maura Baker of Zero Tolerance Coffee and Chocolate in Oklahoma, express frustration over the mounting costs of taxes and regulations, which leave little room for providing health insurance. Baker’s experience reflects a broader sentiment among small business owners who feel overwhelmed by the financial burdens of staying operational.

As the threat of a significant tax hike looms in 2025, small businesses continue to navigate an increasingly complex and costly landscape, calling for urgent legislative action to alleviate these pressures.