Do Small-Group Health Insurance Regulations Influence Small Business Size?

State small‐group health insurance reforms, implemented in the 1990s, aimed at controlling the variability of health insurance premiums and to improve access to health insurance. These reforms only affected firms within a specific size range, and as a result, they may have affected the size of small firms around the legislative threshold and may also have affected the propensity of small firms to offer health insurance. We examine the relationship between small‐group reform and firm size and find evidence that small firms just below the regulatory threshold that were offering health insurance grew in order to bypass reforms.