One-third of all people enrolled in Medicaid nationwide are connected to small businesses—specifically small business owners, employees, and children or other family members of those owners and employees . This includes approximately 11 million children with parents who are self-employed or work for small businesses. Small businesses face higher health care costs in the private insurance market making Medicaid a vital insurer for lower wage earners and their families.

. This includes approximately 11 million children with parents who are self-employed or work for small businesses. Small businesses face higher health care costs in the private insurance market making Medicaid a vital insurer for lower wage earners and their families. Nationwide 20% of small business owners, employees, and their children or other family members are covered by Medicaid. Large cuts to Medicaid that are moving through Congress will result in millions of people losing health coverage and becoming uninsured, which will threaten the health and economic security of a significant portion of the small business workforce.

Large cuts to Medicaid that are moving through Congress will result in millions of people losing health coverage and becoming uninsured, which will threaten the health and economic security of a significant portion of the small business workforce. In the Northeast and the West, a higher percentage of small business owners, employees, or family members are covered by Medicaid — likely a result of higher eligibility levels for children and/or the adoption of the Affordable Care Act’s Medicaid expansion, which is an especially important source of coverage for small business employees. In ACA expansion states about one in five people who earn their living at a small business are covered by Medicaid (19%). Many of the cuts moving through Congress target the ACA expansion group.

This issue brief examines the prevalence of Medicaid as a source of insurance for small business owners, employees, and their family members using 2024 data from the Census Bureau’s Current Population Survey Annual Social and Economic Supplement (CPS ASEC). Small businesses are defined as those with under 100 employees. Our analysis of 2019 data prior to the pandemic revealed similar shares. As Figure 1 shows, one third of Medicaid enrollees nationwide earn their living at a small business or are the family members of small business workers or owners. About half of these are children whose parent(s) are small business owners or employees, 36% are employees of small businesses, 3 percent are owners of small businesses and the remaining 10 percent are other family members, such as spouses.

One in five small business owners, employees, and children or other family members are covered by Medicaid nationwide. A look at regions finds that the Northeast and Western regions have higher shares of small business-connected individuals and family members enrolled in Medicaid and people than the national average of 20%. The South has the lowest share which is most likely because many large states in the South such as Texas, Florida and Georgia have not expanded Medicaid to low-income adults under the Affordable Care Act. Please see Appendix Table 1 for a list of which states are in each region.

Examining the data by ACA Medicaid expansion status underscores this point. As Figure 2 shows, people who earn their living at small businesses are more than twice as likely to have Medicaid coverage in expansion states than in non-expansion states. Small businesses face higher health care costs in the private insurance market, and it is more difficult for them to obtain and offer comprehensive, affordable coverage for their workers and their dependents, which is why Medicaid plays such an important role.

As a consequence of higher income eligibility levels for children than adults nationwide, children are more likely to have Medicaid coverage than their parents and other adults in general. Therefore, it stands to reason this would be the case for children whose parents earn their living at a small business. Children in families connected to small businesses have higher rates of Medicaid/CHIP coverage (38%) as compared to adults (14%) . Interestingly, almost one-quarter of small business owners have children covered by Medicaid/CHIP. See Table 2. Regional differences are less pronounced for children in small business-connected families, but again children in the Northeast and the West are more likely to be covered by Medicaid than in the South and Midwest. See Table 3.

Conclusion

Congress is considering the largest cuts to Medicaid in history. Many, but not all of these proposals target the ACA’s Medicaid expansion. Millions are expected to lose coverage, and states will face significant budget challenges. These findings underscore that Medicaid plays a vital role as a health insurer for children and low-wage workers who earn their living at a small business. Medicaid cuts put the health and economic security of a significant share of the small business workforce at risk. Any disruptions to Medicaid would be harmful to entrepreneurs, people who earn their living at small businesses, their family members and the ability of small businesses to continue to fuel job growth

Methodology

Data Sources

This report from the Georgetown University Center for Children and Families (CCF) uses U.S. Census Bureau 2024 Current Population Survey Annual Social and Economic Supplement (CPS ASEC) data accessed through Integrated Public Use Microdata Sample (IPUMS) to estimate the number and share of small business owners, employees, and family members covered by Medicaid. Data reflect the previous calendar year (2023). Data from the 2019 CPS ASEC were also reviewed for comparison but are not included in the report.

Definitions

Small business owners are defined as individuals who reported being self-employed in an incorporated business. Small business employees are defined as individuals who reported working for wages in a private company with fewer than 100 employees.

Family members are defined as members within a shared “health insurance unit.” Children ages 15–18 may be counted as small business owners or employees rather than dependent children when applicable.

CPS ASEC data reflect health insurance coverage during all or part of the previous calendar year (the CPS ASEC is conducted in March). ​Please note that CPS estimates are not adjusted by the Census Bureau (or by CCF) to address the “Medicaid undercount” often observed when comparing survey data to the actual numbers of individuals enrolled in Medicaid and CHIP based on federal and state administrative data.

South Dakota adopted the ACA Medicaid expansion on July 1, 2023 and North Carolina on December 1, 2023. State administrative data indicate that Medicaid enrollment rose considerably in 2024 but is not reflected in this report.

Appendix Tables

Endnotes