“It feels immoral": Small businesses struggle with rising healthcare premiums

This time of year is nerve-wracking for Cindy Wheeler. As vice president and operations manager at Beacon’s Closet, which has four vintage and thrift stores in New York City, it’s her job to figure out health insurance for their nearly 50 full-time employees. It’s always a lot of work in the lead up to open enrollment. But this year has been something else.

When the business got its annual renewal letter from Anthem Blue Cross and Blue Shield this fall, Wheeler was stunned to see the premium increase: 59.5%.

“It seemed like a joke,” she said. “I was like, ‘Am I reading this right?’”

She was.

“I sent the letter to all my partners, and I have to say, the immediate reaction was incredible anger,” Wheeler said.

It’s also just way out of step with the annual increases Beacon’s Closet has seen in the past, and with how much employer premiums are projected to rise nationally. In 2026, the average healthcare premium employers pay rose 5%, according to a recent analysis from the health policy nonprofit KFF. Beacon’s Closet’s premium increased 8.3%.

“Which seemed awful,” Wheeler said. “But it was the best we could do.”

For 2027, early estimates project employer premiums are likely to rise roughly another 8-9%; more than double the rate of inflation, but nowhere near the nearly 60% increase that Anthem initially offered Beacon’s Closet.

“All the four stores combined, we pay about $600,000 a year for health insurance,” Wheeler said. “With that increase, it was going to be more than $1 million a year. And that is not sustainable. Like we cannot do that. We would go out of business.”

After appealing to Anthem, and not getting any good options back, Wheeler and her co-owners decided to post the renewal letter on Instagram.

“Because it's outrageous and it's wrong,” she said. “It feels immoral to us.”

The post got thousands of likes and hundreds of comments. Lots of other small business owners also reached out, Wheeler said, to share their experiences and offer suggestions.

“We understand the financial challenges rising healthcare costs create for New York businesses and their employees,” Anthem Blue Cross and Blue Shield said in a statement. “Increasing hospital, physician, and prescription drug costs continue to drive premiums higher, particularly impacting smaller employers.”

It also said the company has “been actively engaged with this employer and their broker, providing multiple coverage options and working to identify a plan that meets their needs and budget.”

The cheapest of those other coverage options is a 34% premium increase. Still a nonstarter, in Wheeler’s mind. But after weeks of trying, she hasn’t been able to find other options elsewhere that are much better.

“We don't know what we're going to do yet,” she said. “I think that the last resort will be the marketplace.”

Meaning, instead of offering their employees a plan through work, they may have them each buy their own insurance through the Affordable Care Act and reimburse them for most of it.

“But I’ve gotta tell you,” Wheeler said, “I've been at the marketplace for the state of New York, and the prices aren't much better.”

No matter where they end up, the rising cost of healthcare is increasingly untenable for many small businesses like Beacon’s Closet.

“For 25 years of our 30 years of existence we used to pay 100% of our health insurance premiums for our staff,” Wheeler said. “And it wasn't the craziest thing in the world. It didn't hurt us.”

It was a point of pride for the company that they could offer such good health benefits. But a couple of years into the pandemic, premiums hit a point where they couldn’t afford to do that anymore.

“We decided that we had to ask our staff to pay for part of it. And it was really hard,” she said. “I mean, it was really emotional for me personally.”

Now with the kind of increase Beacon’s Closet is facing this year, the company is going to need to find other ways to make the math work.

“The increased cost has to go somewhere,” Wheeler said. “Our rent’s not going down.”

And they can only raise prices so much on secondhand clothes.

“Unfortunately, what happens, and I don't even like saying this, it makes our wages be stagnant,” she said. “For us to do a quality of life raise, which we try to do every two years, it becomes almost impossible.”

Which feels terrible, especially in a city as expensive as New York.

It didn’t used to be like this.

“I just think about the years where this was just not a big deal. Like we renewed, and it went up maybe 3% , and that was that,” Wheeler said. “And the fact that we're at this place right now, that we are just struggling to just figure out how that's going to work for us, I mean, I just think that it says a lot about the system and how broken it is.”