Rising Health Insurance Costs Among Texas Restaurants
Operating expenses for three Waco-based restaurants have been rising, particularly the costs associated with providing employee health insurance, according to co-owner Kyle Citrano. Health insurance rates are unpredictable, often fluctuating significantly due to changes in employee participation or on-the-job injuries. Since reopening after COVID-19 shutdowns, health insurance costs have increased by approximately 5%, prompting Citrano to shift some premium and deductible costs to employees.
This issue of escalating insurance costs is widespread among business owners statewide, especially in the restaurant sector. Factors such as low employee participation can lead to additional charges from insurers. Moreover, broader economic challenges like inflation and increasing credit card fees are compounding the strain on businesses.
Legislative Efforts to Address Health Insurance Costs
The Texas Legislature is actively seeking solutions to the burden of rising health insurance costs, as both legislative chambers are preparing to tackle the issue in the upcoming session. Federal regulations require organizations with more than 50 employees to offer health insurance. Nearly half of Texans have insurance through their employers. A report from the Business Group on Health projects a 9% increase in national business health costs in 2026, while KFF reports a 6% rise in annual premiums for employer-sponsored family health insurance from 2024 to 2025.
The Texas state government has faced annual health cost increases between 3% and 9.8% since 2014, according to the Employee Retirement System of Texas. Rising costs shrink resources available for employee wages, potentially affecting recruitment and retention. When higher insurance costs are shifted to employees, it can deter low-wage workers from enrolling in health plans, affecting their healthcare access and work attendance.
Challenges and Market Dynamics
Experts cite consolidation within the healthcare industry, including among hospitals and intermediaries, as contributing to higher premiums and service costs. A lack of clarity around pricing complicates negotiations for better rates. Legislative efforts are focused on addressing these transparency issues. The Texas Hospital Association suggests that consolidation supports operations in financially struggling areas. However, hospitals face challenges like insurance reimbursement shortfalls and administrative demands.
State Representative James Frank emphasized the need for affordability in healthcare, aiming to foster a competitive, transparent market. Meanwhile, Amy Hartman of Credit Human highlighted that healthcare costs are increasing more rapidly than any other business expense, adversely affecting companies and their workforce.
Texas Employers for Affordable Healthcare, a nonprofit, is engaging businesses in advocacy efforts to reduce insurance costs. Executive Director Chris Skisak noted the unsustainability of shifting costs to employees. The organization is addressing price transparency and market competition issues amid hospital consolidations. The state legislature is exploring measures to enhance market transparency, particularly concerning hospital and Pharmacy Benefit Manager (PBM) ownership.
In summary, while businesses like Citrano's face rising operational costs, including for employee health insurance, efforts are underway at both the state and industry levels to increase transparency and address market dynamics contributing to these challenges.