SBAM survey shows businesses cutting back on hiring due to healthcare costs

GRAND RAPIDS, Mich. -- A Small Business Association of Michigan survey shows businesses are cutting back on hiring due to the rising costs of health care.

The association's president and CEO, Brian Calley, said Tuesday on West Michigan's Morning News it is now affecting Michigan's economy.

"And it's not really surprising for people who own businesses to see the way they're being held back now," Calley told WOOD Radio. "We've seen all costs rise. But this is one that perpetually, year over year, double-digit increases and it's just not sustainable."

The Small Business Administration survey shows that 76 percent of the member businesses say the cost of providing health care is affecting their ability to hire more employees. And 51 percent said they've had to reduce or eliminate benefits due to costs.

"There is something different happening now," Calley said. "Small business owners are having to literally change the way that they're operating, because of the investment outlook, the employment, everything about the business that revolves around it. In fact, someone described it as, 'I feel like I'm a healthcare company that also does the main business on the side.'"

Calley mentioned there are two things that are driving the costs upward: the price for pharmaceuticals and rising costs stemming from health-system mergers.

Regarding pharmaceuticals: "The year over year increases are breathtaking. It's really stifling and kind of dwarfing a lot of other things," he said.

"With all the building and conglomerate building within the health systems themselves, we've also seen the cost of claims from health systems rise at multiples over inflation," Calley said.

He described it as being almost like an arms' race.

"Everywhere you turn there's new medical infrastructure being built. These big, huge conglomerates have a lot of pricing power. They're using that pricing power to increase costs," he said.

Calley was Michigan's lieutenant governor from 2011 to 2019. He was a state representative before that.

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