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Healthcare Costs Imperil Farm Families and Their Rural Providers

Ben Cole, for HealthLeaders Media, December 12, 2007
American farmers and ranchers, for the most part, aren't having trouble finding health insurance, according to a recent study. But the same report also draws another more unsettling conclusion: Having insurance may not be good enough.

The report released by The Access Project found that 90 percent of farmers and ranchers surveyed had health insurance, but still incurred depleted savings, experienced debt, and delayed seeking care due to medical costs and steep insurance premiums.

With American farmers and ranchers struggling to cope with escalating healthcare costs, the problem has the potential to dramatically affect rural hospitals.

"Our small, rural hospitals are really the ones that are at the greatest risk," says Alana Knudson, associate director for research at the Center for Rural Health at the University of North Dakota School of Medicine, and co-author of the study. "Many of our small, rural hospitals have very, very small margins, so when the patients are unable to pay, it has a direct impact not only on the hospital but on the employees that work there--and also on the businesses that provide products as well as provide services to the hospital."

Carol Pryor, senior policy analyst with The Access Project, agrees, and adds that the insurance policies people across the country are forced to choose from play a big role in the problem.

"I think it absolutely has the possibility of affecting providers generally, which is especially important in the rural context where the healthcare infrastructure is more fragile," says Pryor. "It can affect providers both with people avoiding care then needing more costly care, but also to the extent where people's policies require them to afford large out-of-pocket costs. In some cases, people don't have the resources to pay for that."

As part of the report, more than 2,000 non-corporate farm and ranch operators were surveyed. Despite a high rate of insurance coverage among those surveyed, 26 percent of respondents reported high out-of-pocket expenses in 2006, with half of those families spending more $1,700 or more in out-of-pocket expenses.

Twenty percent of those surveyed incurred medical debt, or bills from hospitals, physicians, dentists and other providers that they were unable to pay, according to the findings.

"When you are looking at our farm and ranch families, you have to look at where they are getting their health insurance, and about a third of them are getting their health insurance through the individual market rather than the group market--that makes a big difference in the products that they are able to purchase, and the cost of those products," Knudson says.

The survey's findings are reflecting changes in the market that are affecting people across the country, Pryor says. She notes that health insurance premiums are rising much faster than either wages or general inflation, and in the face of increases in healthcare costs, insurers are trying to limit their risk by shifting more of the costs to consumers.

"As sole proprietors, farmers and ranchers are much more likely than the population at large to be purchasing health insurance in the individual group market," Pryor says. "There is lot of research that shows that both the premiums and the out-of-pocket costs are much higher in policies purchased in that market than in group coverage. Of course, they also don't have the advantage of having an employer share the costs of premiums."

With healthcare spending increasing, the problem is not going away any time soon, Knudson says.

"The challenge is that our healthcare spending continues to go up and the predictions are that it is going to be a steady increase--this is not something that is going to plateau or go down," Knudson says. "As healthcare costs go up, they have to be paid for somehow, and I think that is a real concern for our country because of the gross domestic product that it takes to be able to pay for our healthcare needs in our country."

Pryor says a combination of efforts would be necessary to help offset the challenges facing ranchers, farmers, and the rural healthcare providers they frequent. One might be preventing health insurers from "cherry picking" their customers, which can make coverage for people with existing health conditions more expensive, she says. Pryor also suggests possibly expanding public programs such as the State Children Health Insurance Program, or giving everyone the option of buying into a program such as Medicare based on a sliding scale based on income.

However, simply insuring more people may not be the answer either, Pryor cautions. "We need to be careful to say the issue is not just being insured. Almost all of these people are insured, they're just not getting the financial protection they need."

Ben Cole is associate editor with HealthLeaders Online News. He can be reached at bcole@healthleadersmedia.com.

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