Almost half of the employees at small businesses work for ones that do not offer a health insurance plan. CBO describes sources of coverage, health plan options, enrollment, and premiums.
In this report, the Congressional Budget Office describes various aspects of the small-group health insurance market. In most states, plans in that market are available to businesses with 50 or fewer employees. CBO found the following:
Sources of Coverage for Small Business Workers and Families. Almost half of the employees at small businesses work for ones that do not offer a health insurance plan. Many people in households in which someone works at a small business (and nobody works at a large business) rely on coverage from Medicaid, through a family member working elsewhere, or from the nongroup marketplace. People in such households are three times as likely to be uninsured as people in households with workers at larger businesses.
Enrollment. Total enrollment in health insurance plans offered by small businesses rose from 16.9 million in 2014 to 18.6 million in 2024 (the most recent year for which data were available for CBO’s analysis). Plans established under the Affordable Care Act (ACA) accounted for 22 percent of enrollment in small businesses’ health plans in 2014, 60 percent in 2018, and then 50 percent in 2024. Grandfathered and transitional plans fell from 60 percent in 2014 to just 4 percent in 2024, as many businesses in those older plans switched to alternative types of plans. Self-insured plans and other alternatives such as association health plans became more widely available over time, contributing to the rise in enrollment in such plans from 18 percent at the beginning of the period to 46 percent at the end.
Premiums. ACA-regulated small-group plans are community-rated, meaning insurers cannot use enrollees’ health history when setting premiums. In contrast, most other types of plans are experience-rated, meaning insurers can take enrollees’ health risk into account when setting premiums. Average premiums in ACA community-rated small-group plans grew at rates similar to those for experience-rated plans from 2014 to 2021 and more quickly thereafter. The divergence may have been partly driven by small businesses with healthier employees moving from community-rated plans to experience-rated plans, thus pushing up the average risk in the community-rated market, although many other factors can also affect premiums. Among different states, premium growth has varied significantly.
