“Now is the beginning of the breaking point”: Half of Michigan Small Businesses May Be Forced to Drop Health Care Benefits Due to Cost Increases 

65% of small business owners say the cost of health care is a significant barrier to offering employee benefits 

Lansing, MI – It’s national small business month, but instead of celebrating, Michigan’s smaller operators are struggling to balance the books, as they continue to stretch every dollar to combat inflationary costs and provide health coverage for employees. 

A new survey from the Small Business Association of Michigan (SBAM) paints a dire picture, as nearly 8 out of 10 small business owners report double-digit increases in employee healthcare premiums, and over 75% say the cost of healthcare limits their ability to hire new employees.  

“Someone must pay the increased cost of healthcare, and in Michigan, it seems small businesses owners are bearing the brunt of it, with double-digit cost increases,” said Brian Calley, President and CEO of the Small Business Association of Michigan. “Some employers have seen an increase of as much as $2,000 per employee, per year. For a small business with 25 employees, that’s $50,000 more per year just in healthcare costs – $50,000 that could instead be used to hire another employee or invest in the business.” 

Perhaps the most striking data point from the May 2026 survey comes from the prompt: The way things are going with health insurance costs, it will be [x] years before I might consider dropping coverage entirely for my employees: 

“In a business like ours, we’re constantly watching every cost and finding ways to operate more efficiently, but there’s only so much you can do when health care premiums keep rising at this pace, said Patti Eisenbraun, owner of Brown Iron Brewhouse in Royal Oak. “These increases aren’t sustainable, and they’re forcing small business owners to make difficult decisions about staffing, pricing, and benefits. We need to see the same level of urgency and creativity within the health care system that small businesses bring to solving challenges every day.” 

Over 85% of those surveyed also said employee benefit costs influence their long-term planning and growth strategies. 

“Small business owners want to take care of their employees, and offering health coverage has always been part of that commitment, said Mike Shabluk of Erie Custom Signs in Saginaw. “But when costs keep climbing year after year, it becomes harder to see a path forward. If nothing changes, more small businesses will be put in a position where they simply can’t offer coverage at all and that has real consequences for employees, families, and communities across Michigan.” 

SBAM’s Board of Directors issued an open letter in April, seeking to call broader attention to the health care cost crisis, and asking those who pull the levers within the healthcare system to work harder to minimize cost increases that are being passed onto small business owners.  

SBAM received 300 of member responses to its May 2026 healthcare costs survey. 80% of respondents have 50 or fewer employees. 

About: The Small Business Association of Michigan focuses solely on serving the needs of Michigan’s small business community through advocacy, collaboration and buying power. Today they serve over 33,000 members in all 83 counties of Michigan. SBAM is located in Lansing, just one block from the Capitol. 

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