DTN/Progressive Farmer

Insurance Problems Remain

Insurance Problems Remain

Farmers Still Face Problems Reining in Premium Costs

By Chris Clayton
March 2017
Insurance Problems Remain

A 2015 USDA study looked at health insurance by different commodities. Dairy farmers stood out as the group least likely to have coverage. The failure of the health reform bill last week in Congress means farmers and other small businesses will continue to struggle with issues such as annual premium increases. (Graphic courtesy of USDA)

OMAHA (DTN) — The failure of the House health insurance bill last week leaves farmers and other small business people without any relief from increasingly higher premiums.

The defeat of the bill last Friday left House Speaker Paul Ryan, R-Wis., declaring “Obamacare is the law of the land” as a whole lot of finger-pointing began in Washington.

For farmers who are big enough to employ workers, the defeat leaves the continued expectation of higher insurance premiums. Ben Riensche, who farms near Jesup, Iowa, sees no relief in sight for his insurance premiums after the bill’s failure.

“It all stems from the fact that my employee health plan went up 66% in November last year,” Riensche said. “I was looking at it as step one in this rollback of the premium increase.”

Riensche said the increase looked like it was built in to happen after the election, and he was just supposed to swallow this large increase in premiums that now costs him $18,000 a year to provide family health coverage per employee. Riensche has seven employees. Just four years ago, his costs per employee were $4,000 to $5,000.

“I just ask myself, why do I have to shoulder all of this increase? We had no change in plan or benefits. I know there is medical inflation, but what changed? Why does my business have to shoulder this?” Riensche said.

To cut costs, Riensche could raise the deductible for his employees or increase the co-pay when those workers or family members go to the doctor. “But we have to provide an acceptable level of coverage for them.”

According to a USDA survey in 2015, roughly 55.6% of farm families get their insurance through an off-farm job from either one spouse or both working for someone else, which is equal to the percentage of the general population. The survey showed that 30% of farmers with more than $250,000 in sales also have at least one spouse working off the farm for health insurance benefits.

“Isn’t that sad that you can’t have your family work on the farm and make a living that will pay for medical insurance or health-care benefits?” Riensche said. “You have to seek off-farm employment to make it work? It’s just so disappointing.”

Just about 17.6% of farmers are like Riensche and buy insurance directly, according to a USDA survey in 2015. Farmers are slightly more likely than the average population to go without health insurance. About 10.7% of farmers in the survey don’t have insurance, while roughly 9.1% of the U.S. population does not have health insurance.

Juanita Duggan, president and CEO of the National Federation of Independent Business, called the failure of the health-care bill on Friday “extremely disappointing.” Roughly 60% of the group’s members want the Affordable Care Act repealed. A survey by NFIB in 2016 showed the cost of health insurance was the biggest issue listed by its members nationally. Health care ranked as the highest issue in every region of the country.

“Small businesses have struggled for seven years under Obamacare’s taxes and mandates, and now that struggle will continue for the foreseeable future,” Duggan said. “Passing a bill with a massive tax reduction for small businesses should have been the easiest of votes for both parties.”

Individual families can receive premium subsidies under Obamacare if the household income is under $97,450 for a family of four. After that, the average silver plan nationally costs a family roughly $923 a month, or $11,074 a year, according to the Kaiser Foundation. The prices for silver plans, however, can range dramatically in different states.

Businesses with under 50 employees are not required to provide health insurance to their employees, but even the smallest employers have increasingly offered insurance as a benefit. David P. Lind, whose company tracks employer benefits, conducts annual surveys of Iowa health benefits. The results last fall showed that roughly 62% of businesses with two to 10 employees provide health-care coverage to their workers.

Lind’s survey shows the “average” premium for a family plan offered by an Iowa business has tripled in costs since 1999 to roughly $15,743. However, those costs vary and per-employee costs for smaller employers are even higher.

Lind said he doesn’t think either Obamacare or the GOP plan truly deal with the costs and waste built into the health care system. “Neither Obamacare nor the Republican plan are addressing these issues in my estimation,” Lind said. “Those are issues that really need to be addressed sooner rather than later.”

Farmers and other businesses that offered health insurance prior to the Affordable Care Act could see even higher increases in 2018. That is because exemptions for “grandfathered” plans bought before March 23, 2010, would have to comply with all of the Affordable Care Act requirements and mandates now required in other health insurance policies.

Iowa’s insurance commissioner approved premium increases for four insurance companies late last year that offered individual health-care coverage in the state. Wellmark was approved to increase individual policy plans under the ACA by up to 43%.

Insurers have left Iowa in recent years, leaving Wellmark as the dominant option for individuals and small businesses. Obamacare has stifled competition, especially in smaller states and rural areas. Riensche was hoping the GOP plan would give small businesses such as farmers more insurance options.

“What I was hoping it would do is provide some price competition on premium and allow us to shop for other providers,” Riensche said. “I was hoping we could look for competitive solutions. That’s the way it works with everything else. If you don’t like your current vendor, you shop. There is no real shopping around right now for insurance.”

The current health-care situation makes it a lot harder to hire more workers or move part-time workers to full-time employment.

Riensche highlighted that problem for small businesses.

“Why would I ever hire additional workers when I can mechanize and solve a solution? A bigger combine isn’t going to ask for more health insurance,” he said. “I’m going to hire less people because of this, or I’m certainly going to keep more people on part-time status of not having benefits if I can do that. I want to provide people with good careers and not just help them limp along. I want to do right by them, but the way Obamacare was developed is keeping me from doing that.”