Every year, Kris Bullinger braces herself for insurance sticker shock.

Bullinger is a co-owner of Olympic Truck Service, a diesel repair shop in Tumwater, Washington. Health coverage for the company’s 17 employees has long been one of her fastest rising and most unpredictable expenses.

The same coverage costs more every year," she said.

This year, Bullinger estimates she’ll spend around $115,000 on premiums, equal to 7.5% of the business’s gross profit.

“It’s one of the biggest things we pay for besides salaries,” she said. She’s not sure how much more she can afford.

Over the past year, the cost of health insurance has drawn widespread attention as federal lawmakers battled over the future of tax credits that help individual buyers afford coverage. In the shadow of that debate, small-business owners have been quietly struggling with insurance affordability challenges of their own.

For years, the cost of insurance has risen rapidly for small businesses, even as coverage has eroded. Pushed to financial limits, some are no longer paying for it at all, leaving workers to buy plans on their own.

“We’ve seen lots of small businesses drop coverage,” said Paul Fronstin, director of health benefits research at the Employee Benefit Research Institute, a nonprofit focused on employee benefits.

In 2019, Bullinger’s company paid around $350 per employee per month for medical, dental and vision insurance. That’s risen almost 50% since. Since the start of the year, the company has been paying around $525 per employee per month. In the same time, copays have doubled from $20 to $40 per office visit; deductibles have risen from $2,500 to $4,000.

"It's important for me that people have it,” she said about offering insurance to employees. That said, "I wish we could count on a consistent price."

Double-digit increases

In Washington, employers with 50 or fewer employees can buy health insurance through the small-group market.

In theory, small-group market plans are attractive because they offer protections such as comprehensive health benefits, coverage for preexisting conditions and prohibitions on setting premiums based on past claims. The market is a way for small employers to get insurance at rates that they might not be able to negotiate on their own with insurance companies. It's also regulated by the state Office of the Insurance Commissioner.

By contrast, bigger and better-resourced companies often choose to self-insure — meaning they cover the cost of employees' claims themselves — or they may use their leverage to negotiate customized plans with insurers.

But employers who buy from the small-group market have faced rising costs lately.

In November, the OIC approved an average 12.8% rate increase — the highest in over a decade. (Rates are what insurance companies use to calculate premiums, which also reflect factors including age, address and smoking status.)

The OIC is legally required to approve rate increases that it determines are financially justified.

In other words, the cost of health insurance rises because medical bills do. Over the past decade, inflation, higher prices charged by hospitals, technological advancements and many other factors have made going to the doctor more expensive.

“Premiums ultimately reflect the cost of health care,” said Fronstin.

That puts small businesses in an especially precarious spot. In general, they have fewer coverage options compared with larger companies, said Matt McGough, policy analyst at KFF, an organization that conducts research on the health care system. Even as premiums increase, small employers often have to swallow them just to stay competitive.

Some small businesses in Washington say that they’ve had to adapt by switching to plans with less coverage.

Carolyn Koh is chief operations officer for Genesis Advanced Technologies, which designs and assembles loudspeakers and amplifiers in Kirkland, Washington.

The family business currently spends $4,000 a month on premiums for its four employees, which include Koh, her brother, her sister-in-law and her nephew. The premiums also cover a fifth family member, a dependent who doesn't work at the business. That figure is a 17% increase from last year. It also pays $700 per year for membership to Life Science Washington, the trade association through which the company gets insurance.

"The cost of medical benefits keeps going up and up," said Koh. The current health plan includes a $3,000 per-individual and $6,850 per-family deductible. As a result, Koh avoids going to the doctor except for emergencies. "Higher deductible plans are really 'just in case' plans."

Higher costs, less coverage

Washington-based households that own a small business are more likely to struggle to afford health insurance, according to recent research.

In a 2024 survey of 1,000 residents, 44% of respondents living in households that own small businesses reported that monthly premiums were too high, compared with 29% among all respondents. The survey was conducted by Fair Health Prices Washington, a nonprofit that advocates for affordable health care.

The ramifications of high health care costs are grave, the survey found. Households that own small businesses reported being more likely to have medical debt, to delay going to the doctor and to forgo medicine or medical equipment, compared with all respondents.

When business is slow, Carolyn and her brother take voluntary pay cuts to keep the company in the black.

If premiums go up again next year, they will have to switch to a plan with higher deductible and copays.

But increasingly, small businesses are finding themselves unable to sponsor coverage.

Over the past two decades, the share of small businesses that offer health insurance to employees has noticeably shrunk. In 2024, 31.3% of Washington employers with fewer than 50 employees offered insurance, according to a national survey conducted for the Department of Health and Human Services. When the survey first began in 1996, that figure was 40.6%, nearly 10 percentage points higher.

Without relief, the figure could keep falling.

“You’ll see the trend continuing of small businesses forgoing insurance for employees,” said Emily Brice, co-executive director of advocacy for Northwest Health Law Advocates, a nonprofit in Washington that focuses on health care access.

By comparison, nearly 97.9% of employers with 50 or more employees offered health insurance in 2024. Under the Affordable Care Act, large employers have to offer insurance to full-time employees.

“Small employers are really stuck in a difficult situation,” said Patrick Connor, the Washington state director of the National Federation of Independent Business, which advocates for small businesses.

Health insurance is highly valued by most workers. According to a 2022 poll conducted by the U.S. Chamber of Commerce, 80% of respondents named health insurance as one of the most important benefits that an employer can offer.

“Chances are employees will go to jobs with health benefits,” said Connor.

Some workers may have access to insurance through a spouse or public programs like Medicaid, which serve low-income people.

But those without end up bearing the brunt of health care costs alone. Some go uninsured. Others turn to the potentially costly individual market, which allows people to choose coverage based on their needs and finances. That's not necessarily an affordable alternative.

Despite record enrollment last year, fewer people are buying insurance off the individual market in 2026, due to the expiration of tax credits that long helped middle-income buyers afford premiums. As a result, thousands of Washingtonians are choosing to go without this year.

Lisa Peterson is the president and CEO of Data Enterprises of the Northwest, a Bellevue, Washington-based business that sells tool tracking software.

The company currently covers health insurance for all full-time employees, as well as dependents.

"I want to take care of my employees," Peterson said. "But at this juncture, it doesn't look like prices are going down."

During renewal last June, premiums jumped 10.5%. If they keep climbing, Peterson may have to switch to a higher-deductible plan, or employees will have to start partially contributing to dependent premiums. "You can only budget so much before you start cutting," she said.

‘Plain scary’

Nonprofit organizations face particular obstacles to affording health insurance.

For Susan Dibble, executive director of Page Ahead, a children’s literacy nonprofit in Washington, “it’s philosophically and practically important to offer insurance.”

But as a nonprofit, it’s hard for Page Ahead to absorb spikes in operational costs. Unlike a business, she can’t raise prices on goods or services.

This year, the organization will spend around $56,000 on coverage for three employees and two spouses. That’s a 35% increase from premiums in 2022. Meanwhile, Dibble’s insurance broker has warned her to plan for a 25% increase at the end of this year.

“The speed and size of these increases is just plain scary,” she wrote in an email.

When expenses grow faster than donations, the organization has to serve fewer children.

That sense of an opportunity cost — that money spent on premium increases could be put to better use — was echoed by many.

For Data Enterprises of the Northwest, it would mean continuing to pay for full dependent coverage.

For Genesis, it would mean a bigger team and more specialization. Carolyn’s brother currently designs and assembles speakers. With additional employees, he could focus on design, his area of expertise.

For Olympic Truck Service, Bullinger said, it was hard to imagine what the company would do if premiums were lower. She’d gotten so used to feeling squeezed for so long.

Eventually, the answer was simple: The company would probably still have spent the money on its workers, but in ways that were more direct such as bigger raises or more vacation.

Those benefits seem like quaint luxuries while health insurance remains expensive but necessary. For now, Bullinger said, I just want to make sure that they can go to the doctor.”

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