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Medicaid Coverage Among Small Business Communities: A Critical Analysis Aligned with Sustainable Development Goals

Introduction

This report examines the significant role Medicaid plays as a health insurer for small business owners, employees, and their families in the United States, with a focus on the implications for the Sustainable Development Goals (SDGs), particularly SDG 3 (Good Health and Well-being) and SDG 8 (Decent Work and Economic Growth). Utilizing 2024 data from the U.S. Census Bureau’s Current Population Survey Annual Social and Economic Supplement (CPS ASEC), the analysis highlights Medicaid’s impact on health coverage within small business communities, defined as businesses with fewer than 100 employees.

Key Findings on Medicaid Coverage in Small Businesses

Prevalence of Medicaid Coverage

1. Approximately one-third of all Medicaid enrollees nationwide are connected to small businesses, encompassing owners, employees, and their family members. This includes about 11 million children whose parents are self-employed or work for small businesses.
2. Nationwide, 20% of small business owners, employees, and their families are covered by Medicaid, underscoring Medicaid’s vital role in providing health insurance to lower-wage earners in this sector.
3. Regional disparities exist, with the Northeast and Western United States exhibiting higher Medicaid coverage rates among small business communities, likely due to expanded Medicaid eligibility and adoption of the Affordable Care Act (ACA) Medicaid expansion.

Regional and Policy Influences on Medicaid Coverage

• Higher Coverage in ACA Expansion States: In states that have adopted the ACA Medicaid expansion, about 19% of individuals connected to small businesses are covered by Medicaid, more than double the coverage rate in non-expansion states.
• Lower Coverage in Southern States: Southern states such as Texas, Florida, and Georgia, which have not expanded Medicaid, show the lowest coverage rates among small business populations.
• Children’s Coverage: Children in small business families have higher Medicaid/CHIP coverage rates (38%) compared to adults (14%), reflecting broader eligibility criteria for children nationwide.

Implications for Sustainable Development Goals

SDG 3: Good Health and Well-being

Medicaid’s role in providing health coverage to low-wage workers and their families in small businesses directly supports SDG 3 by ensuring access to essential health services and reducing health disparities. The potential Medicaid cuts under consideration by Congress threaten to reverse progress by increasing the number of uninsured individuals, thereby undermining health security for millions.

SDG 8: Decent Work and Economic Growth

Small businesses are key drivers of economic growth and job creation. Medicaid coverage supports the workforce by alleviating health care cost burdens, enabling small businesses to maintain a healthier, more productive workforce. Cuts to Medicaid risk destabilizing this workforce, threatening both economic security and the sustainability of small businesses.

Conclusion

Medicaid serves as a critical insurer for a substantial portion of the small business workforce and their families, contributing to the achievement of SDG 3 and SDG 8. Proposed significant cuts to Medicaid, particularly targeting the ACA expansion population, pose serious risks to health coverage and economic stability within this sector. Policymakers must consider these impacts to safeguard the health and economic well-being of small business communities and support sustainable development.

Methodology

Data Sources

This analysis is based on the 2024 U.S. Census Bureau Current Population Survey Annual Social and Economic Supplement (CPS ASEC) data accessed via the Integrated Public Use Microdata Sample (IPUMS). The data reflect health insurance coverage during the 2023 calendar year. Comparative data from 2019 were reviewed but not included in this report.

Definitions

• Small Business Owners: Individuals self-employed in incorporated businesses with fewer than 100 employees.
• Small Business Employees: Individuals employed for wages in private companies with fewer than 100 employees.
• Family Members: Individuals within a shared health insurance unit, including spouses and children; children aged 15–18 may be classified as owners or employees where applicable.

Note: CPS ASEC data are not adjusted for the Medicaid undercount commonly observed when comparing survey data to administrative enrollment figures.

Appendix Tables

Detailed regional data and state classifications are available in Appendix Table 1. Additional coverage statistics by family member type and region are presented in Tables 2 and 3.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 3: Good Health and Well-being
   • The article focuses on Medicaid coverage, which is directly related to ensuring healthy lives and promoting well-being for all ages, especially low-wage workers and children connected to small businesses.
2. SDG 8: Decent Work and Economic Growth
   • Small businesses and their workforce are central to the article, highlighting the economic security and job growth implications related to Medicaid coverage.
3. SDG 10: Reduced Inequalities
   • The article discusses Medicaid as a critical insurer for lower-income small business workers and their families, addressing inequalities in access to healthcare.

2. Specific Targets Under Those SDGs Identified

1. SDG 3: Good Health and Well-being
   • Target 3.8: Achieve universal health coverage, including financial risk protection and access to quality essential health-care services and medicines.
2. SDG 8: Decent Work and Economic Growth
   • Target 8.5: Achieve full and productive employment and decent work for all women and men, including young people and persons with disabilities, and equal pay for work of equal value.
   • Target 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, and small business growth.
3. SDG 10: Reduced Inequalities
   • Target 10.2: Empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.

3. Indicators Mentioned or Implied to Measure Progress

1. Indicator for SDG 3.8:
   • Proportion of population covered by health insurance or a public health system (implied by Medicaid enrollment rates among small business owners, employees, and their families).
   • Number and share of people losing health coverage due to Medicaid cuts (implied as a measure of risk to universal health coverage).
2. Indicators for SDG 8.5 and 8.3:
   • Employment status and health coverage of small business workers (percentage of small business workforce covered by Medicaid).
   • Number of small businesses with employees covered by Medicaid (implied by data on small business size and Medicaid coverage).
3. Indicator for SDG 10.2:
   • Coverage rates of Medicaid among low-income and vulnerable populations connected to small businesses (percentage of children and adults covered).
   • Regional disparities in Medicaid coverage (Northeast and West vs. South and Midwest).

4. Table: SDGs, Targets and Indicators

Source: ccf.georgetown.edu