Study shows ag families struggling with health care costs

America's farm and ranch families are paying top dollar for health insurance that inadequately covers their needs and causes them significant financial risk, according to a report released last week by The Access Project.

The Access Project is sponsored by the Robert Wood Johnson Foundation.

The study states were Iowa, Minnesota, Missouri, Montana, Nebraska, North Dakota and South Dakota.

The 2007 Health Insurance Survey of Farmers and Ranchers shows that while nine in 10 farm and ranch operators have health insurance, nearly a quarter (23 percent) report that insurance premiums and other out-of-pocket health care costs are causing financial difficulties for themselves and their families.

These families report spending 42 percent of their income on health care coverage and medical costs. In addition, more than four in 10 farmers and ranchers (44 percent) report spending at least 10 percent of their annual income on health insurance premiums, prescriptions and other out-of-pocket medical costs.

Farm and ranch operators are especially hard hit because they are often forced to buy insurance on the individual, nongroup market, where insurance costs more and often covers less.

"Unaffordable insurance costs and medical bills can seriously threaten any family's financial stability. But for hard working farm families, it affects the viability of their business and the strength of the rural economy," said Carol Pryor, senior policy analyst at The Access Project and lead author of the report.

Pryor said America's agricultural system is still dominated by family-owned farms, and ensuring their stability is critical to our nation's future.

"The financial impact of rising health care costs on family farms threatens our country's rural heritage, potentially affecting tens of millions of Americans," Pryor said.

The study shows that on average, those farmers and ranchers purchasing insurance in the nongroup market spent twice as much on health care as those who got their coverage through off-farm employment.

The median amount spent by farmers and ranchers who got insurance on the nongroup market was $11,200 a year (including premiums and out-of-pocket costs), compared to $5,600 spent by people who got insurance through employment off the farm or ranch. Approximately one-third (36 percent) of the study's respondents purchased health coverage on the open market. Nationally, only 8 percent of Americans obtain their health insurance this way.

 "Farmers and ranchers, like millions of small business owners, face serious obstacles paying for health coverage that is both comprehensive and affordable. This study can help policymakers think about this as they consider health reform," said Risa Lavizzo-Mourey, M.D., M.B.A., president and CEO of the Robert Wood Johnson Foundation. "The rising cost of health care is affecting everyone, whether insured or not. Many people have policies with premiums and co-pays that are so high that important, preventive care is unaffordable to them. That can create difficult tradeoffs between caring for your health and stabilizing your finances."

 One-fourth of those surveyed (26 percent) report having to draw on other financial resources to cover the costs of care, with 65 percent dipping into family savings. Nearly one in four (22 percent) incurred credit card debt or increased existing debt. Others took out a loan, borrowed against their farm, withdrew money from a retirement account or turned to friends and family for financial help. 

 "Being able to afford health insurance coverage that provides true protection is increasingly a middle-class concern," said Bill Lottero, field director of The Access Project and co-author of the report. "Unaffordable health care costs saddle people with medical debt and threaten their long-term security by draining their savings and money set aside for retirement and other long-term needs."