CBO: Small Business Health Insurance Report
A new Congressional Budget Office report finds nearly half of small business employees lack employer-sponsored health coverage, with enrollment shifting.
Nearly half of all employees at small businesses work for firms that do not offer a health insurance plan. The Congressional Budget Office detailed this finding in a September 2026 report. It analyzed coverage sources, enrollment trends, and premium costs in the small-group market.
Many people in households where someone works at a small business rely on other sources for health insurance. They often turn to Medicaid. Others obtain coverage through a family member working at a larger company. Some purchase plans on the nongroup marketplace. According to the CBO, people in these households are three times more likely to be uninsured than those in households with workers at larger businesses.
Enrollment Trends
Total enrollment in health plans offered by small businesses increased from 16.9 million people in 2014 to 18.6 million in 2024. The composition of these plans changed dramatically over that decade.
Plans established under the Affordable Care Act accounted for 22 percent of enrollment in 2014. That share rose to 60 percent by 2018. It then fell back to 50 percent in 2024. Meanwhile, grandfathered and transitional plans plummeted. They fell from 60 percent of enrollment in 2014 to just 4 percent in 2024. The CBO notes many businesses in these older plans switched to alternative types of coverage.
Self-insured plans and other alternatives became more widely available. Association health plans are one example. Enrollment in these plans rose from 18 percent at the start of the period to 46 percent by the end.
Premium Dynamics
The report highlights a key difference in how premiums are set. ACA-regulated small-group plans are community-rated. This means insurers cannot use an enrollee's health history when setting premiums. Most other types of plans are experience-rated. These allow insurers to factor in enrollees' health risks.
Average premiums in ACA community-rated small-group plans grew at rates similar to those for experience-rated plans from 2014 to 2021. After 2021, premiums for community-rated plans grew more quickly. The CBO suggests this divergence may have been partly driven by small businesses with healthier employees moving from community-rated plans to experience-rated ones. This shift could push up the average risk in the community-rated market. That would increase premiums. The agency cautions that many other factors can also affect premiums. Premium growth has varied significantly among different states.
Data and Scope
The CBO's analysis is based on data from 2024, the most recent year available. In most states, small-group market plans are available to businesses with 50 or fewer employees.
