Closing the Gap to Support Small Businesses

By Katie Horneffer, Intern, Care4Carolina

During the pandemic, many of us have watched one or more of our favorite local restaurants or shops permanently close their doors. For small businesses, which often operate on tight financial margins even during normal times, the pandemic struck a difficult blow. Although the interests of small businesses have always been important to policymakers, it is more important than ever to pass policies that ensure our local stores and restaurants continue to succeed. With 47% of small business owners citing healthcare costs as a major barrier to growing or maintaining their operations, closing the health insurance coverage gap is one way to support small businesses. Closing the gap would ensure that both employees and owners have access to affordable health insurance, ultimately creating more productive and financially stable workplaces.

Health insurance is expensive, and many small businesses can’t afford to provide it to their employees. Without employer-sponsored insurance, many employees—such as those working in restaurants, sales, or cleaning jobs— make too much to qualify for Medicaid but not enough to be eligible for subsidies in the marketplace. Closing the coverage gap gives more small business employees access to affordable health insurance. In fact, in states that closed their coverage gaps, the number of small business employees covered by Medicaid increased by about 50%.

For small businesses that do chose to provide health insurance, closing the gap also makes insurance more affordable. Research shows that, in states that have closed their coverage gap, private insurance premiums are 11% lower compared to states that haven’t. This could translate to important savings for small businesses, who want to provide for their employees while often operating on tight margins.

When their workers have health insurance, small businesses can thrive. Insured employees are healthier— meaning they miss less work and are more productive in the workplace. The CDC estimates that lost productivity due to poor worker health costs businesses $1,685 per employee per year. Additionally, small businesses are better able to compete for workers with larger companies when potential employees don’t have to worry about insurance. Closing the gap may also foster entrepreneurship—people with great ideas may be more willing to take the leap and start their own business if they know they won’t lose access to insurance. Finally, closing the gap would boost the state’s economy, which in turn would help small businesses. Closing the gap is estimated to increase North Carolina’s gross domestic product by as much as $2.9 billion while creating over 37,000 new jobs. This local cashflow could translate into greater support for and more patronage of local businesses.

For many small business owners, their employees feel like family. Owners want to ensure that their employees are healthy and financially stable—but they can’t always afford to provide health insurance. By closing the coverage gap, North Carolina would help support the local shops, stores, and restaurants—and their owners and workers—that make our communities special.