Recent announcements by prominent insurers in several states of very large premium increases have attracted much attention.Many are concerned that this could become a trend.In this report, the authors examine the effects of premium increases much higher than the rate of health care cost growth on coverage, costs and the decisions by small firms to offer ESI.They find that such increases would adversely affect low- to middle-income families and older, nonelderly persons most, though there would be significant loss of coverage even among higher income families.Fewer small employers would choose to offer insurance to their workers.