Business owners across the state are grappling with rising health insurance costs while other operating expenses are simultaneously increasing. Costs have now risen so significantly that action is being taken by the state government and other organizations.
Under current federal law, employers with more than 50 employees are required to provide health insurance, with about half of Texas covered by an employer-sponsored plan. A report by the Business Ground on Health found that national health costs for businesses are projected to rise 9% in 2026.
Prior to the report, polling firm KFP found annual premiums for employer-sponsored family health coverage rose 6% from 2024 to 2025, with costs just under $27,000 annually for a family of four.
Employers claim that rising costs shrink the amount of money available for labor, leading employees to miss out on raises and making it more difficult to hire new employees. Some of the lowest paid employees are also missing out on health insurance plans altogether. Amy Hartman, the senior manager of Human Investments for Credit Human, a Texas-based credit union, says healthcare costs are rising faster than any other company expenses, including wages.
Experts claim that consolidation in the healthcare industry is the cause of rising health insurance costs. Insurers, hospitals and companies acting as middlemen between providers and employers are acting together to drive up insurance premiums and the cost of health services.
Zach Cooper, a professor of public health and economics at Yale University, testified before the U.S. House select committee in April noting there had been more than 1,300 mergers among the nation’s approximately 5,000 hospitals since 2000.
A lack of transparency around how providers, insurance companies and other industry players set prices for medical care and prescriptions is also making it difficult for patients and employers to negotiate prices. Legislators are prepared to take aim at both issues.
“When it boils down, this is about affordability,” said Texas State Rep. James Frank, chair of the House Select Committee on Affordable Healthcare. “This is about healthcare and being able to afford care. It has become much more expensive - and not just more expensive - more expensive than it should be.” He adds that, “most of the things we need to do have general agreement across party lines.” “When I look at what the state needs to do, it is to help foster a healthier healthcare market, an actually functioning healthcare market.”
Though Frank has not begun crafting legislation, he hopes to use the interim hearing of his ongoing lawsuit against Blue Cross Blue Shield (BSBS), to gain better understanding and build consensus around competition within the healthcare market and transparency for patients.
Frank’s lawsuit against BSBS, which he claims to have filed as a business owner for the sake of the employees of his two companies, alleges that the insurer intentionally concealed prescription drug rebates to inflate insurance costs for Texas employers. Several nonprofits are also working to decrease healthcare costs by advocating for organized efforts and legislative action.
The Texas Employers for Affordable Healthcare is a nonprofit organization focused on uniting Texas businesses to advocate for lower health insurance costs. Executive director, Chris Skisak, said that he thinks companies have “realized that they cannot cost-shift to the employees and ask them to pay more any longer. Employers are realizing this is something that is at a higher level and this is something that needs their attention.”
Skisak claims that businesses have typically stayed out of health insurance debates despite being the most common providers; however, now that rising health insurances prices are impacting their bottom lines, things are changing.
Charles Miller, the director of health and economic mobility policy for nonprofit think-tank Texas 2036, claims that although healthcare costs are thought of as federal issues, the Texas Legislature can increase transparency around hospital ownership and restrict mergers and anticompetitive practices in the healthcare market.
In defense of the health insurance industry, the Texas Hospital Association claimed that consolidation was helping to keep hospitals open in areas that struggled financially, as it allowed hospitals to pool resources. They also say hospitals face rising costs of their own due to insufficient reimbursements from health insurance and steep administrative burdens.
Chief communications officer for the Texas Hospital Association, Carrie Williams, stated that patients “recognize that if the choice is between their provider closing or maintaining an access point for healthcare in their community, consolidation offers a path to keeping care local.”
He adds that, for hospitals, his organization supports cost transparency for patients and called for greater transparency among health providers of all types, rather than just hospitals and health insurance plans.