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Health care at the crossroads
After six decades of debate in this country, Americans are deciding which route will lead in the direction of accessible, affordable health care insurance.
Leroy Hodge was devastated when he received a letter notifying him that his health insurance was being cancelled. Six months earlier, the Hamill, South Dakota, farmer had received preapproval for heart surgery. That was in 1991.
Recently, several million Americans received health insurance cancellation notices. On the surface, it may seem that the 2010 Affordable Care Act (ACA) hasn’t improved anything.
Hodge would disagree. Beginning January 1, arbitrary cancellation is against the law. Companies cannot cherry-pick customers.
His prognosis was worse in yet another way. Hodge had nowhere else to turn. “I would gladly have paid a premium if I could have had health insurance,” he says. “I was uninsurable.”
The new round of cancellations is occurring now because insurers chose not to renew policies through 2014 that don’t offer ACA’s minimum health benefits. Today, the approximately 15.2 million Americans in the individual insurance market have other options in the Health Insurance Marketplace, as well as from their current insurance companies. In some cases, higher premiums for expanded coverage may be offset by the ACA’s free preventive screenings and the elimination of co-pays.
After 60 years of debate, health insurance reform has reached a strategic crossroads. Farmers and other self-employed individuals will play a significant role in the success of the final phase-in of the ACA in 2014. That’s because about 33% of farmers are insured in the private individual market, compared with about 8% of all Americans, according to a 2007 Access Project Report.
Farmers without employer-based insurance spend more on health care than other households. Double-digit premium hikes have been common in the individual market. A 2012 survey of Illinois Farm Business Farm Management Association members pegs the average per-farm total health care-related expenses, including insurance, at $10,100 for a family of three to five.
“Premiums have been higher because farmers are in a high-risk occupation and insurance underwriters know it,” says Joyce Lash, a Cooperative Extension family finance specialist serving nine south-central Iowa counties. “Charging a higher rate based on occupation is off-limits now. Insurers can set rates only on geographic region, age, family size, and tobacco use.”
An Agriculture.com poll conducted in early November indicated that farmers had not visited their state Health Insurance Marketplaces or HealthCare.gov. They cited a lack of time, a faulty website, and a distrust of government as barriers. Many were aware they might receive tax credits and subsidies. Most rated their understanding of the Marketplace as very poor, poor, or fair. This mirrors the results of a University of Nebraska-Lincoln poll taken last summer.
However, the 2010 passage of the ACA already has launched a series of fundamental changes. Many families have taken advantage of reforms that allow them to keep a child age 26 and younger on their insurance policy or to eliminate preexisting condition exclusions for children under age 19. In 2014, adults with preexisting conditions (like hypertension, diabetes, or heart disease) no longer can be denied insurance or charged more. Most preventive health care services now are covered.
“The Affordable Care Act already has brought change to the health care system, and more changes are still to come,” says Nicole Peritore, University of Kentucky Cooperative Extension program coordinator for health education.
ACA not your grandfathered plan
Some Americans are renewing their coverage through current health insurance plans that are grandfathered in for one more year. “Our insurer isn’t on the Marketplace but plans to participate next year,” says Mandi Goretska, Corydon, Iowa. “We’re anxious to see what it will offer then, and if we can do better or even qualify for tax credits.” (Read the Goretskas’ story on page 38.)
Grandfathered plans were in effect before March 23, 2010, and haven’t changed in ways that substantially cut benefits or increase costs. Insurers must notify people that their plans are grandfathered in through 2014 and may not include some ACA protections. (Premium tax credits and reduced co-pays are only available through HealthCare.gov.)
Marketplace coverage began January 1 for those who met the December 23 application deadline. March 31, 2014, is the deadline to avoid the individual mandate fee for being uninsured. Exceptions to this fee include people who don’t make enough income to file a federal tax return, or those who’d have to spend more than 8% of their household income on the lowest-cost Marketplace plan (even with available tax credits and subsidies).
The 2014 penalty is a maximum of $285 per family or 1% of modified adjusted gross income, whichever is greater. “The IRS hasn’t issued the rules,” Lash says. “I’ve cautioned farmers not to assume they’d only risk paying the minimum penalty.”
Working to get the word out
For the past three decades, women have left the farm to work at jobs that provided health insurance for their families. The ACA offers the potential for women who want to work full time on their farm to have that option – without losing their family’s health insurance. Others may choose to change jobs.
“My job provided our insurance until recently,” says Carolyn Sheridan, Spencer, Iowa. “Now, I’m changing jobs and won’t have employer coverage. It looks like I’ll save on HealthCare.gov, although we don’t qualify for tax credits.” (Read the Sheridans’ story on page 38.)
Many of the self-employed and underinsured likely to benefit from the Health Insurance Marketplace live in rural America. The top seven counties in North Carolina with the highest rates of uninsured are among its top 10 ag counties.
“There’s been so much controversy and confusion that many people aren’t sure what to think or do,” says Robin Tutor, acting director, North Carolina AgroMedicine Institute. “We’re here to help farmers wade through the information.”
She adds, “So far, it’s similar to other experiences with programs related to government. Many farmers don’t think it’s for them, or feel there’s a catch, or say the personal and tax information are intrusive.
“Our most important message is that every situation is different, and there are many caveats to the rules,” she says. “We encourage farmers to at least look through the basic information, and if they think there’s even the slightest chance they could be eligible for help through the Marketplace, they should apply. Applying doesn’t mean they have to purchase. Eligibility for tax credits or reduced co-pay policies is based on modified adjusted gross income and may not be as restrictive as other asset-based benefits.”
Under the ACA, a family of four with an income of $94,200 would be eligible for premium tax credits. The Kaiser Family Foundation estimates enrollees who qualify for premium tax credits would receive an average tax credit of $5,548 per family.
“There’s a lot of inertia,” says Lash, one of many Extension specialists conducting health insurance workshops. “Many farmers worry they’ll end up with worse coverage. Some are surprised that all the policies on the Marketplace are offered by private companies.”
This Extension outreach will continue through 2014.
“We’ve offered educational information in over 40 Kentucky counties and formed partnerships with larger organizations such as AARP,” Peritore says. “Extension is a source of unbiased information, and we know our communities. We’re a credible resource.”
Kentucky is one of 18 states that chose to set up health insurance exchanges without any federal assistance. These states generally reported a less rocky rollout. Kentucky had enrolled over 56,437 by December 10. Most of the new enrollees qualified for Medicaid coverage, but about 15,518 have purchased private plans. More than 41% are under age 35.
“The states with their own exchanges are meeting or exceeding their numbers,” says Brad Gibbens, deputy director, University of North Dakota Center for Rural Health, Grand Forks.
HealthCare.gov is much improved, but it’s uncertain when it will receive a clean bill of health. January 1 is the next test of the online system.
However, lack of competition in rural areas may hamstring HealthCare.gov. The cost of insurance in rural counties may remain higher because there are fewer insurers than in urban counties. This is especially true in the South, according to a 2013 New York Times report.
The ACA includes provisions aimed at increasing health professionals in rural areas. Rural hospitals in the 25 states that declined to expand Medicaid will continue to pick up the tab for people unable to pay.
The ACA also is aimed at reducing the cost side of the health care equation.
“One of the most significant reforms is changing from a fee-for-service system to a patient outcome value-based system,” Gibbens says. “Providers will be paid based on improved patient outcomes – not per procedure.”
The White House Council of Economic Advisers reports:
• Health care spending growth since 2010 is the lowest on record.
• Medical price inflation is the lowest rate in 50 years.
• The Congressional Budget Office has cut 2020 projections of Medicare and Medicaid spending by 10%