Black business owners are not strangers to overcoming obstacles. But with rising prices on everything from gas to groceries, some are seeing a decline in profit margins and some are forgoing their entrepreneurial pursuits altogether. In addition, a national survey of 1,209 small business owners shows that the high price of healthcare coverage, in particular, is leading entrepreneurs to raise prices, which, in return, is stifling their small business growth and hiring, and cutting into employee paychecks.
“Rising healthcare costs are adding financial stress to small business owners on top of inflation,” says Dr. Erika Gonzalez, co-chair of Small Business for America’s Future. “Small business owners are being forced to make difficult decisions like passing on the costs to consumers or requiring employees to shoulder a greater burden of healthcare costs to keep out of the red. This is damaging our economic health and stability.”
Small business owners being held back by the high price of healthcare want Congress and the healthcare industry to take concrete steps to lower costs. Nearly 80 percent of small business owners surveyed felt very strongly about where the burden of lowering healthcare costs lay. And they believe it’s an issue that the nation’s lawmakers need to address.
“The Inflation Reduction Act promises to help by addressing the cost of prescription drugs, stabilizing health insurance prices, and extending ACA subsidies,” says Shaundell Newsome, co-chair of Small Business For America's Future and founder of Sumnu Marketing. “But while that’s a good start, we need more.”
Newsome’s take is reflective of the sentiment shared in the survey. While small business owners believe Congress needs to lead the charge, 77 percent of respondents worry that our leaders will fail to act or not go far enough in addressing the issue. Newsome, who also acts as the Chairman of the Board for the Urban Chamber of Commerce notes that small businesses are open to a myriad of steps that Congress must take to ensure a just and equitable economic framework as it relates to healthcare costs for small business owners. "The survey asked about eight different policies to bring down the cost of healthcare and they pretty much all gained support,” says Newsome. “What that means to me is we need our leaders to do something—anything—to bring down the cost of healthcare.”
Taking matters into their own hands, more than half— 53 percent— have thought about no longer providing health insurance for their employees, and 74 percent have explored reducing their business contribution to their employees' health insurance. Some of these small business owners have stopped offering healthcare completely, with nearly 80 percent attributing that step to the cost being too high. The increase has also prompted 53 percent of small business owners to increase the prices of their goods or services to offset healthcare costs.
"For Black entrepreneurs who already face many challenges to starting a business—like a harder time accessing capital —the high cost of health coverage is one more big barrier to entry and success,” Newsome tells EBONY. “Taking the plunge to start a business is full of obstacles to overcome but doing it without being able to afford healthcare for yourself is often enough to keep people from even trying because they need the security of healthcare benefits.”
He adds that this issue also impacts the quality of employees that a business can attract. Quality candidates are often looking to businesses to offer healthcare as a benefit. “Even if you do offer health insurance as a benefit, it is a huge hit to a small business's bottom line that can keep them from investing in themselves and growing,” Newsome says. “The fact is that the high cost of healthcare can keep Black entrepreneurs from starting a business or achieving success—and that needs to change."