Rising health care costs are putting real pressure on Michigan’s small businesses — limiting hiring, slowing growth and forcing tough benefit decisions.
A May 2025 Small Business Association of Michigan (SBAM) survey found:
- 76% of small business owners said health care costs affected their ability to hire
- 51% reduced or eliminated benefits due to rising costs
- Four out of five said health care costs are now a barrier to business growth
The biggest takeaway for Brian Calley, President and CEO of SBAM, was how dramatically health care has become a dominant expense in 2025.
“Small business employers are saying, ‘We can't take the chance of hiring new people, or it's diminishing the number of new people we can hire,’” Calley said. “That's going to impact people in such profound ways when it comes to the overall economic health of every community around Michigan.”
What employers are experiencing
Sue Tellier, President of JetCo Federal in Grand Rapids, says her company has experienced double-digit premium increases for six consecutive years.
“This year our increase is 18.7%, so when I say double-digit increases, they’re not just barely 10%,” Tellier said on a recent episode of Michigan’s Big Show hosted by Michael Patrick Shiels. “It really forces us to make very difficult hiring decisions as to whether to hire, even.”
Health care costs have become an opportunity cost for small employers.
“If my health care costs are increasing by that much, we either have to look at plan design changes – which I don't want to do because that negatively impacts my employees – or I have to look at cutting something else,” Tellier said. “So instead of growing jobs, I am just paying more for health insurance.”
For employers who purchased insurance through Blue Cross Blue Shield of Michigan, the yearly average increase of health insurance rates from 2015 through 2021 was 1.2%. Between 2022 and 2025, statewide average increases for employers jumped to 8.6%, with some groups seeing 25–30% increases, creating instability that’s difficult for small businesses to manage.
“Even if it's a predictable increase, that's manageable,” Tellier said. “But 20%, 25%, 18.7%, that is not predictable. It's not manageable.”
What we're doing to help employers
Blue Cross Blue Shield of Michigan knows employers are frustrated, and shopping for lower rates often isn’t the answer when costs are rising everywhere.
“Today we do offer 120 different plan options for our customers,” said Sandy Fester, Vice President of Michigan Business at Blue Cross Blue Shield of Michigan. “We are engaging with the market differently, knowing their frustrations… what we've been trying to do is really try to advise them and consult them on different options.”
We’re also working to address the upstream drivers of costs, including medical prices, prescription drugs, our own administrative costs and outdated payment models through partnerships with providers.
Why employer voices matter
As medical costs rise 40% faster than other commodities, systemic change is required. That’s why engagement matters.
“Please do get involved with your local chamber, with (SBAM) and with other small businesses that you can speak with one strong voice to policymakers,” Calley said. “You can't put this off any longer.”
Supporting the backbone of Michigan’s economy
Small businesses are the backbone of Michigan’s economy. At Blue Cross Blue Shield of Michigan, we’re committed to helping employers navigate rising costs, find the right coverage solutions and advocate for changes that make health care more affordable, so businesses can grow, hire and support the people who depend on them.
Learn more about how Blue Cross Blue Shield of Michigan is addressing health care affordability here.
Related:
- How Blue Cross Blue Shield of Michigan Is Leading the Shift to Affordable, Value-Based Care
- The Pharmacy Solutions Helping Blue Cross Rewrite the Prescription for Affordability
- Spend Where It Counts: How to Fit Being Healthy Into Your Budget
Photo credit: BCBSM
