Health Costs Jumping 18% For Small And Medium-Sized Businesses

June 3, 2026 - 23:39

Small and medium-sized businesses are facing a sharp 18% jump in healthcare costs, according to a new report from Morgan Health. The increase is driven by a combination of persistent inflation and rising medical expenses, leaving many employers struggling to manage their budgets. The report highlights that smaller firms, which often have less negotiating power with insurers, are bearing the brunt of these increases. Unlike large corporations that can self-insure or leverage broad networks, small and midsize businesses typically rely on fully insured plans, making them more vulnerable to premium spikes.

The data shows that the cost surge is not limited to a single region or industry. Employers across sectors are reporting higher claims for prescription drugs, hospital stays, and specialist visits. Some are responding by shifting more costs to employees through higher deductibles or copays, while others are exploring alternative plan designs like level-funded arrangements. However, experts warn that simply passing costs down may lead to lower employee satisfaction and retention issues. The report also notes that the 18% figure outpaces general inflation, suggesting that healthcare-specific factors, such as consolidation among providers and hospitals, are compounding the problem. For many small business owners, this trend threatens to erode already thin profit margins and may force tough decisions about coverage options for the coming year.