NFIB Pushes Congress for Sweeping Small Business Health Care Reforms as Premiums Hit Record Highs

Small business owners across America are facing a mounting health care affordability crisis, and the nation’s leading small business advocacy organization is demanding that Congress act now. The National Federation of Independent Business (NFIB) released a comprehensive Legislative Health Care Plan on March 11, 2026, outlining ten specific legislative solutions designed to lower persistently rising health care costs for small employers and their workers.

The plan arrives at a critical moment. According to an analysis by the Peterson-KFF Health System Tracker of rate filings from 318 insurance companies across all 50 states and the District of Columbia, small businesses with Affordable Care Act (ACA)-compliant plans are facing a median premium increase of 11% for 2026 — the sharpest spike in more than a decade. For companies with just 2–5 employees, the pressure is even more acute: according to Gusto’s analysis of payroll and benefits data, median health insurance premiums have risen 23% since 2022, outpacing general inflation by 13 percentage points, with annual premiums reaching nearly $8,500 per employee.

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“For over 40 years, small business owners have shared how the cost of health care is their number one problem,” said Tyler Dever, NFIB Principal of Federal Government Relations. “They value offering health insurance coverage, and many see it as a critical piece in attracting and retaining employees. However, the U.S. health care system is burdensome, expensive, and cumbersome. Washington continues to push more mandates, regulations and one-size-fits-all policies that fuel industry consolidation, increase costs, and reduce choices for patients. NFIB is urging Congress to confront exploding health care costs by implementing these immediate and targeted policy reforms that will increase flexibility and affordability, and coverage options for small business owners and their employees.”

A Crisis That Has Persisted for Decades

Health care costs have ranked as the number one problem for small business owners every year since 1986, according to NFIB’s Problems and Priorities survey. That consistency is a damning indictment of a system that has failed Main Street even as it has generated enormous profits for large hospital networks, pharmacy benefit managers, and insurers.

For small businesses — typically defined as those with 50 or fewer employees — the burden is disproportionate. Unlike large corporations, small employers have limited negotiating power with insurers, fewer resources to absorb annual rate hikes, and less flexibility to self-insure. A survey of 620 small business owners by Small Business for America’s Future found that 84% are concerned about their ability to afford health care in 2026, while nearly 40% said premium increases would create severe financial strain and threaten their operations. Close to a quarter said they would be forced to drop employee coverage entirely.

As CNBC reported, for firms with 10 to 199 workers, the average family premium climbed to $26,054 in 2025 — up sharply from $16,977 in 2020. That is a cost increase that far outstrips what most small businesses can absorb on thin operating margins.

Insurers themselves point to multiple pressures. The primary driver for 2026 rate increases is the underlying cost of health care services — hospitalizations, physician care, and prescription drugs — which insurers estimate is rising at roughly 9% per year. Specialty medications like GLP-1 drugs for diabetes and weight management, provider consolidation reducing market competition, labor shortages at hospitals and clinics, and declining enrollment in small group markets are all compounding the problem.

The Ten-Point Legislative Plan

NFIB’s new Legislative Health Care Plan identifies ten concrete actions Congress can take to directly address these structural problems.

1. CHOICE Arrangements — Customizable Health Reimbursement Accounts

The plan calls on Congress to pass the CHOICE Arrangement Act, which would codify health reimbursement arrangements (HRAs) into the tax code. Under this model, small business owners would be allowed to allocate a set amount of pre-tax funds directly to their employees, who could then shop for individual coverage that best fits their own needs. This bypasses costly group plans entirely and gives workers genuine freedom of choice.

NFIB has noted that the average cost of a health care premium for small business owners has risen over 120% since 2000. CHOICE Arrangements represent a path away from rigid, expensive group plans — giving both employers and employees more control without sacrificing coverage.

2. Association Health Plans — Strength in Numbers

The proposal urges Congress to pass legislation allowing small businesses to band together through Association Health Plans (AHPs), which give smaller employers the same purchasing power as large corporations. The U.S. Chamber of Commerce has backed the Association Health Plans Act of 2025 (S. 1847 and H.R. 2528) as a way to expand access to affordable, high-quality coverage through pooled bargaining.

According to estimates from the Congressional Budget Office and Joint Committee on Taxation, AHPs could reduce small-group premiums by up to 30%. In December 2025, the House passed the Lower Health Care Premiums for All Americans Act, which includes an expansion of AHP access — a sign that momentum is building, though the legislation still faces hurdles in the Senate.

3. Short-Term, Limited-Duration Insurance — Extending Flexible Options

NFIB’s plan calls for making Short-Term, Limited-Duration Insurance (STLDI) plans available for extended time periods. These plans have historically offered lower-cost alternatives to ACA-compliant plans, providing a critical lifeline for individuals between jobs, self-employed workers, or those whose income doesn’t qualify them for subsidies. NFIB’s 2026 legislative priorities document specifically calls for restoring and expanding STLDI options that were curtailed by regulatory action.

4. Expanding Health Savings Accounts

Health Savings Accounts (HSAs) are a proven tool for helping individuals set aside pre-tax dollars for medical expenses. NFIB is pushing Congress to expand HSA access — including increasing contribution limits and broadening eligibility — so that more small business employees can benefit from this tax-advantaged savings vehicle. As Gusto’s data confirms, the share of small businesses offering HSA-eligible health plans has grown from 33% in 2019 to nearly 48% in 2025, demonstrating strong demand on the ground for this type of flexibility.

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5. Eliminating One-Size-Fits-All Mandates

NFIB is calling on Congress to eliminate costly insurance mandates such as Essential Health Benefits (EHBs), Medical Loss Ratio (MLR) requirements, and Community Rating rules that force insurers to charge uniform premiums regardless of risk. These mandates, while designed to protect consumers, also drive up plan costs for small businesses by requiring coverage for services that many employees may never use. Allowing more tailored plans would introduce genuine competition and give small employers more affordable options.

6. Site-Neutral Payments — Curbing Hospital Consolidation

One of the most significant structural drivers of rising health care costs is hospital consolidation. When health systems acquire physician practices and outpatient facilities, they often charge facility fees on top of standard service rates — dramatically inflating the cost of routine care. NFIB’s plan supports site-neutral payment policies that would require Medicare and Medicaid to pay the same rates for services regardless of where they are performed, eliminating the financial incentive for hospitals to consolidate. As the Peterson-KFF analysis notes, a handful of insurers have already pointed to increased provider consolidation as a factor reducing market efficiency and raising costs.

7. Banning Spread Pricing and Reforming Pharmacy Benefit Managers

Pharmacy Benefit Managers (PBMs) are intermediaries between insurers, pharmacies, and drug manufacturers — and they have come under growing scrutiny for a practice called spread pricing, in which they charge insurers more for a drug than they pay the pharmacy, pocketing the difference. NFIB’s plan calls for banning spread pricing and mandating greater PBM transparency. The Lower Health Care Premiums for All Americans Act passed by the House in December 2025 included PBM transparency provisions — a step NFIB has actively supported.

Prescription drug costs are a large driver of rising insurance premiums according to HUB International’s 2026 Benefits Cost Trend report, with high-cost specialty drugs such as GLP-1 medications being a major contributor. PBM reform would help ensure that savings from drug negotiations actually flow through to employers and patients.

8. Purchasing Insurance Across State Lines

NFIB’s plan revives a long-standing proposal to allow businesses and individuals to purchase health insurance across state lines, dramatically increasing competition in markets that currently remain dominated by a small number of local insurers. Allowing insurers to compete nationally would create downward pressure on premiums and expand the range of plan designs available to small businesses.

9. Protecting Access to Stop-Loss Insurance

For small businesses that choose to self-insure — covering employee health claims directly rather than paying premiums to an insurance carrier — stop-loss insurance is a critical backstop that limits liability in the event of unexpectedly large claims. NFIB’s plan calls on Congress to protect small businesses’ access to stop-loss coverage. Some states have imposed minimum attachment points (the threshold at which stop-loss kicks in) that are so high they effectively price small employers out of self-insured arrangements. Federal protections would prevent states from erecting these barriers.

10. Hospital Price Transparency

The final plank of NFIB’s plan addresses a fundamental problem in American health care: patients routinely have no idea what a procedure will cost before they receive care. NFIB supports legislation to strengthen hospital price transparency requirements, so that small business employees — and the employers who fund their coverage — can make informed decisions about where to seek care. While the Trump administration issued a price transparency rule in 2019 that required hospitals to publish their rates, compliance has been inconsistent, and NFIB is pushing Congress to codify and strengthen these requirements.

Why Small Businesses Can’t Wait

The urgency of NFIB’s plan is underscored by the broader economic data. Small businesses represent the backbone of the American economy, yet they are uniquely disadvantaged in the health insurance market. According to NFIB’s 2026 legislative priorities, lowering health care costs for small employers is one of the most critical economic priorities of the 119th Congress.

The problem is not simply one of cost — it is one of competitiveness. When a small business can’t afford to offer health benefits, it struggles to recruit and retain talent against larger corporations that can. As NFIB has noted, health insurance is often cited as a critical factor in attracting and retaining employees. In a tight labor market, this disparity puts Main Street at a structural disadvantage.

States are also beginning to act independently. In Georgia, NFIB recently voiced support for House Bill 1110, known as the Georgia Small Business Healthcare Affordability Act, which would create a tax credit for small employers contributing to employees’ Individual Coverage Health Reimbursement Arrangements (ICHRAs) — essentially the state-level version of the federal CHOICE Arrangements concept. The bill targets businesses with fewer than 50 employees, recognizing that this segment is the most underserved by existing coverage options.

A Moment for Congressional Action

NFIB’s Legislative Health Care Plan lands at a moment when Congress is actively debating the future of American health care. The House passed the Lower Health Care Premiums for All Americans Act in December 2025, with approximately 700,000 additional people per year expected to choose association health plans if the legislation becomes law — around 200,000 of whom currently lack any insurance coverage, according to the nonpartisan Congressional Budget Office.

The debate is far from settled. Supporters argue that expanding market options, eliminating costly mandates, and empowering small businesses to pool together will drive down costs and expand coverage. Critics warn that some of the more flexible plan designs could fragment risk pools and undermine protections for sicker patients.

But for the millions of small business owners who have watched their health care costs spiral for four decades without meaningful relief, the status quo is no longer tenable. NFIB’s ten-point plan offers Congress a clear legislative roadmap — one built not on ideological abstraction, but on the real-world needs of employers who are choosing every year between providing coverage for their workers and keeping their businesses alive.

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Photo Source: Google

By: Montel Kamau

Serrari Financial Analyst

12th March, 2026