Michigan small businesses struggle with rising healthcare costs

LANSING, Mich. (NEWS 10) - Small business owners in Michigan are struggling to balance their books as inflation drives up costs across the board.

According to a new survey from the Small Business Association of Michigan, nearly eight out of 10 small business owners have reported double-digit increases in employee health care premiums.

The financial pressure puts employee plans and day-to-day operations at risk.

“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.”

There are troubling statistics in the Small Business Association survey. Forty-two percent of business owners who responded said if insurance costs don’t come down, they’d consider dropping employee coverage in one to three years.

“Health care is really scary for us to be honest, because it basically doubled overnight for us,” said Lansing business owner Summer Schriner. “There are five of us, so we’re a pretty small operation here.”

Schriner said costly insurance could force her to pause new hiring efforts at both of her Lansing retail stores — Grace Boutique and Bad Annie’s, located in the Old Town neighborhood.

Financial pressures extend beyond healthcare

The financial struggle goes beyond health care.

Harrison Leffel-Jones with the Lansing Economic Area Partnership said tariffs and inflation are also driving up the cost of doing business.

“So, the finished products continue to go up in price, and then also for our manufacturers and our smaller scale folks who are actually creating goods, those raw materials continue to get more expensive,” Leffel-Jones said.

Leffel-Jones said business owners are finding creative ways to get customers in the door, like expanding online sales options.

Schriner is hoping to hold on to her patrons and employees by selling an experience, not just a product.

“Stores are not going away,” Schriner said. “Convenience online is great, but it can also be inconvenient when you have to keep ordering things because they don’t fit you or they don’t quite flatter you, when you have people in your community who are ready to help you any time and are excited to help you find just the right thing.”

Legislative solution proposed

Democratic state Senator Kevin Hertel (D-St. Clair Shores) is behind a legislative effort that would allow small businesses to create what’s called an “association health plan,” meaning they could pay for employee health benefits together, lowering the overall cost.

His bill was introduced on May 21 and sent to the committee on health policy for further consideration.

In the meantime, the Lansing Economic Area Partnership said it does its best to stay on the ground, offering resources to business owners in Clinton, Eaton and Ingham counties so they can stay afloat.

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