Large and small firms pay similar health insurance premiums but this similarity is misleading. Small firms are less likely to offer insurance and when they do, provide less generous benefits than large firms. Premium data does not include the experience of small firms that do not offer coverage, perhaps because they faced higher premiums. This synthesis explores the reasons premiums for small firms are higher than large firms. Findings include: Instability causes higher insurance costs for small firms. Small firms have more employee turnover; drop and add coverage more often; and are more likely to go out of business; this leads to higher administrative costs. Premiums for small firms are more variable because they are more likely to face medical underwriting. Small firms with high average wages are just as likely to offer a health plan as larger firms, but low-wage small firms are much less likely to provide coverage.