Health care costs slamming farm families
Not only is health insurance failing to protect farm and ranch families from financial risk, but it's directly contributing to their financial problems, according to report released today by The Access Project, a nonprofit resource center based in Boston, Massachusetts.
"The individual/private market is not providing the basic benefits that health insurance is supposed to, and the premium costs impose a hardship even when families are healthy," says Jeffrey Prottas, a Brandeis University professor and co-author of How Farmers and Ranchers Get Health Insurance and What They Spend.
The report is the second in a series intended to inform the debate on health care reform. The first report showed that although the majority of farm and ranch operators have insurance, the triple-whammy of high deductibles, premiums and out-of-pocket costs leaves them under-insured when it comes to annual physical exams and preventive care.
Rembrandt, Iowa, farmer Tim Peterson purchases a separate policy for his wife, Teresa, because her asthma and back problems exclude her from comprehensive coverage. "This past year we spent over $6,000 in premiums, and another $10,000 in out-of-pocket expenses," he says. "I'm not a person who is easily frustrated, but people have been talking about health care reform since the 1980s, and it's getting worse. The presidential candidates talk about the health care crisis, but it's really a health cost crisis."
The 2007 Access Project survey of more than 2,000 farmers and ranchers in seven Great Plains states reveals a link between their reliance on the individual insurance market and the amount of their overall health care expenses. Four in five families overall had insurance plans with high deductibles. The survey did not include people 65 or older who are insured by Medicare.
"Family farmers and ranchers struggling to maintain their operations are not well-served by the current health insurance marketplace," says Carol Pryor, lead author of the report and senior policy analyst at The Access Project. "We found that those purchasing coverage directly on the individual market pay the highest premiums for coverage that often leaves them financially exposed."
The survey results indicate that expanding coverage for individuals in the private market by itself will not be sufficient. Tax credits and incentives also are not a silver bullet. "Tax credits aren't likely to make up for the large differences in health care expenditures in the individual market, compared to employer- or government-sponsored coverage," the report concludes.
Sandi Cihlar, a Mosinee, Wisconsin, dairy farm woman agrees. "When farmers need a helping hand, they usually don't look any farther than the end of their own arm," she says. "But they have to compete in a global market today, and increasing health care costs are one more thing threatening the next generation of family farmers."
A highlight of other report findings:
- Families on average spent $7,247 in 2006 on insurance premiums and out-of-pocket costs. For many, average overall health care expenses ranged between seven and 18% of their income.
- People who paid high premiums ($500 a month or more) had significantly higher health care expenditures than those who paid lower amounts. Nearly two-thirds of families who bought coverage directly on the individual market had high premium, high deductible policies.
- When age and health status were taken into account, families purchasing insurance from an agent in the individual market spent $4,359 more than those able to secure insurance coverage through off-farm employment.
- People with high deductible policies generally had higher overall health care costs than those with low deductibles. Among families paying high premiums, those with high deductibles spent 22% more than those with low deductibles.