Marilyn Andersen raises angora goats and llamas for wool that she spins and weaves in her studio at Two Cedars Weaving in Story City, Iowa. She also has a part-time job coordinating distribution of local produce through a service called Farm to Folk. Neither effort comes with health insurance.
“Right now I have health insurance through my husband’s job but that is going to end when he retires in a few months,” she said recently, “and so I’ve just begun a search for health insurance for myself.”
Andersen will be joining many farmers and ranchers who buy individual health insurance. Jon Bailey has studied this issue at the Center for Rural Affairs in Lyons, Neb., and he said that the high number of rural residents who purchase insurance on the individual market means changes to that market are a bigger deal in those areas. Nationally, Bailey said, about 36 percent of farmers and ranchers buy health insurance as individuals. Only five percent of all Americans get it that way. However, as a group, farmers and ranchers are more likely than the overall population to have insurance.
“They generally have significantly lower rates of uninsured than the rest of the population,” Bailey said. In a study he conducted in Iowa, he found that 93 percent of Iowa farmers and ranchers have health insurance compared to 88 percent of all Iowans and 84 percent of all Americans.
“It may not cover very much, or very well—except for catastrophic conditions—and it’s expensive, but they have it to protect their farm,” Bailey said.
An intensely physical occupation, farming requires a lot from farmers’ bodies. Farmers and ranchers have to be fairly healthy to do their jobs and make a profit.
“It’s never been an option for us not to have health insurance,” said Ann Franzenburg, who farms row crops, vegetables and cut flowers full-time with her husband in Van Horne, Iowa. She buys a family policy through the Farm Bureau – a high-deductible plan paired with a Health Savings Account. So when grain sales are up, for example, Franzenburg says she puts more in the account. Even though her healthy family of five hasn’t had major medical needs, it’s expensive.
“Health insurance is a giant chunk in what we have to pay in our budget every year,” Franzenburg said.
As the Affordable Care Act is implemented, a greater percent of people in rural communities will feel its reach because so many rely on individual policies. David Lyons, CEO of CoOportunity Health, a new co-op health insurance carrier that plans to offer individual policies in Iowa and Nebraska, says health insurance co-ops may especially appeal to rural residents because the co-op model is familiar.
“Member-run, member-driven non-profit opportunities are how a lot of the industries in rural America have been built,” Lyons said.
Lyons cites rural electric co-ops and grain co-ops as examples. He said CoOportunity Health wants farmer-members so it can leverage their risk-management expertise.
“We represent a model that they’re very comfortable with in an industry that they’re pretty uncomfortable with,” he said.
Lyons said CoOportunity’s members will figure out themselves how to reduce healthcare costs—perhaps by focusing on prevention—and then members and doctors will all share in the savings. The Affordable Care Act also has provisions to help new players—like CoOportunity—compete against the biggest insurers. In Iowa, that’s Wellmark Blue Cross Blue Shield.
From its sleek, modern downtown headquarters in Des Moines, Wellmark covers most individuals in the state—including the Farm Bureau member policies. Director of actuarial services Pat Ryan said there’s no distinction between rural and urban in policies. As the new law goes into effect, though, he said more risk is shared across more people—which will impact rates.
“Any given person, depending on where they’re being rated at today, could see an increase or decrease,” Ryan said.
Right now, for example, younger men typically pay lower rates than women the same age. But at the other end of the spectrum, older women pay less than men. In the new environment, Ryan said the people currently paying less may pay a little more while those paying the most now could see reductions.
Ann Franzenburg is quite familiar with rate increases—last year her family’s policy went up 12 percent and on April first it’s going up another 13 percent.
“And I don’t, frankly, see it getting any better,” Franzenburg said. But she already has some experience shopping around—her middle child is a college student and now gets insurance through his school. It costs about the same, Franzenburg said, but the coverage is more robust. Her younger son has sometimes qualified for the state’s children’s health insurance program, though he’s been on the family Farm Bureau plan, too.
Lyons said the creation of health care exchanges, also a mandate of the new law, will mean customers like Franzenburg can go to one place and see all of the options in the marketplace. Lyons predicts farmers will benefit from this system, both because some will qualify for subsidies to help pay for policies purchased through the exchange and because they’re not afraid to comparison shop.
“If I can go to the exchange, and I make less than $44,000 per year, roughly, as an individual or $92,000 as a family of four, and I can get the policy I want that manages the risk the way I want it, and significantly reduce the out of pocket cost for my family, I’m going to do it,” Lyons said. Farmers, like other small business owners, are comfortable shopping around for the best deal.
“And while existing carriers may be sending the message, `there’s no need to shop, we’ve got everything that you need. This is all confusing out there, we’ll take care of this for you,’ I think farmers and rural business people understand that when people are telling you there’s no need to shop and you can’t get a better deal anywhere else, they usually realize that’s exactly the time you should be shopping,” Lyons said.
Bailey, of the Center for Rural Affairs, said the critical piece for rural communities is access—to insurance, to providers and in the coming year even to the exchanges, which are expected to be Internet-based. But whatever the challenges, he said farmers and ranchers are committed to having health coverage.
“They see health insurance in a big way as bankruptcy insurance,” Bailey said. “So that an illness or an injury doesn’t bankrupt the whole operation.”