SBAM Survey Says Health Care Costs Significant Barrier To Offering Benefits

Article courtesy of MIRS for SBAM’s Lansing Watchdog newsletter

Michigan’s small businesses continue to struggle as rising health care costs make it problematic to offer employee benefits, according to a new survey from the Small Business Association of Michigan (SBAM).

SBAM’s survey found that nearly eight 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 business owners are bearing the brunt of it, with double-digit cost increases,” said SBAM President and CEO Brian Calley.

“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,” he added.

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 on to small business owners.

According to the survey, 42% said that it would be one to three years before they might consider dropping coverage entirely for their employees, while 16% said it would take four years to six years; 4% said it would take seven years or more.

More than 85% of those surveyed also said employee benefit costs influence their long-term planning and growth strategies, according to SBAM.

Mike Shabluk, of Erie Custom Signs in Saginaw, said offering health care coverage has been part of businesses’ commitment to employees, but increased costs are making a path forward more difficult.

“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,” he said.

Patti Eisenbraun, owner of Brown Iron Brewhouse in Royal Oak, echoed that sentiment, noting that she is “constantly” watching costs and trying to find ways to operate more efficiently. But, she noted, there’s only so much she and other small business owners can do.

“These increases aren’t sustainable, and they’re forcing small business owners to make difficult decisions about staffing, pricing and benefits,” she said. “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.”

SBAM received 269 member responses to its May healthcare costs survey. Eighty percent of respondents have 50 or fewer employees.

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