Report: The number of CT small businesses offering health insurance fell 25% since 2009, biggest decline in U.S.
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Since 2009, the share of small businesses offering health insurance in Connecticut fell nearly 25%, the largest decline in the nation, according to a new study.
The analysis by Take Command — a software as a service (SaaS) company that helps businesses provide Health Reimbursement Arrangements (HRAs) — uses data from the Medical Expenditure Panel Survey (MEPS) to examine how rising costs and policy changes have reshaped the small group insurance landscape.
Among other findings, the study reports that the share of Connecticut small businesses offering health insurance fell by 24.6 percentage points (pp) between 2009 and 2023, and that states in the Northeast have experienced some of the steepest losses in small business health coverage.
While Connecticut posted the largest drop, New Jersey and Vermont were close behind, with decreases of 22.7 pp and 21.5 pp, respectively. Other Northeastern states, including New York (-18.1 pp), Rhode Island (-18.1 pp) and Delaware (-17.1 pp), also ranked among the states with the largest declines.
“This regional pattern reflects a combination of structural and policy factors,” the study states. “Northeastern states generally had higher small business coverage rates to begin with, leaving more room for declines. Employers in the region also face some of the nation’s highest healthcare and business costs, which can make offering coverage more challenging to sustain.”
The study noted that many Northeastern states have developed strong individual insurance markets, “which gave small employers more confidence that workers could obtain affordable coverage outside of the workplace.”
In Connecticut, enrollment in fully insured small business health plans shrank by more than 50% over a six-year period ending in 2023, according to an HBJ analysis of industry data.
Connecticut has seen its share of insurers leave the small-group market over the past several years, including Farmington-based ConnectiCare, Harvard Pilgrim HealthCare, Bloomfield-based Cigna Healthcare, New York-based insurance technology company Oscar and Hartford-based Aetna Inc.
Rising healthcare costs have put increasing pressure on small businesses across the country, the Take Command study states.
“For firms with fewer than 50 employees, offering health insurance has become significantly more expensive over the past decade, forcing many to reevaluate or eliminate this once-common benefit,” it states.
It adds that while employer-sponsored health insurance remains a key component of the U.S. healthcare system, small businesses — facing limited bargaining power and narrower profit margins — have struggled to keep up with premium growth.
According to the study, m\ore than a quarter of the U.S. workforce is employed by firms with fewer than 50 employees, but only 30% of these businesses nationwide offer health coverage.
Other key findings of the study:
- Just 30.1% of small businesses offer health insurance today, down from 47% in 2000 — a decline that tracks closely with a 182% surge in premium costs over the same period.
- Since 2000, average annual premiums for small firms rose from $2,827 to $7,974, nearly 2.4 times the rate of inflation.
- Adoption of Health Reimbursement Arrangements (HRAs) has nearly tripled since 2020, with more than 80% of employers offering them to provide benefits for the first time.
- Since 2009, every major industry sector has seen declines in small business health coverage, including wholesale trade (-17.6 pp), mining and manufacturing (-13.3 pp), and professional services (-13.2 pp).
- Hawaii leads the nation with 71.8% of small businesses providing coverage — more than twice the U.S. rate — but it has still seen a decline, down from 81.1% in 2009.
- The lowest coverage rates are in the Southeast and Mountain West. Fewer than 1 in 5 small firms provide coverage in Wyoming and Alaska. Idaho (20.5%), South Carolina (20.5%), Utah (20.8%) and Florida (20.9%) see comparable rates.
- Just Nevada, Oklahoma, Iowa and Mississippi have seen increases in the number of small businesses offering health coverage since 2009.
The full report covers all 50 U.S. states and the District of Columbia, with a detailed breakdown of changes in small business coverage rates since 2009, employee access to coverage, and average premium costs.
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