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Farmers often pay excessively for health insurance

WILLMAR -- Research by The Access Project, Brandeis University and the University of North Dakota Center for Rural Health shows that the average farm and ranch family pays $7,247 in health insurance premiums and costs each year.

"Farm families face substantial health care costs," said Jeffrey Prottas, research director of the 2007 Health Insurance Survey of Farm and Ranch Operators and a professor at Brandeis University. Farm families paid, on average, between 7 and 18 percent of their income in health care expenditures. Experts use a threshold of 10 percent of income as an indicator of excessive health cost burden.

Using data collected from more than 2,000 non-corporate farm and ranch operators in Iowa, Minnesota, Missouri, Montana and the Dakotas, the survey shows that where farmers get their insurance is a key factor in how much it costs. When the statistics were controlled for age and health status, buyers of insurance on the individual market paid about $5,200 a year more than farm families insured by government programs and $4,300 per year more than those who got their insurance through off-farm employment.

A quarter of survey respondents reported that health care expenses contributed to their financial problems. The money problems in rural communities don't stop there, according to Alana Knudson, co-author of the study and associate director of research for the Center for Rural Health.

Farmers and small businesses, which also face high costs for health insurance, are the building blocks of rural communities. If those business owners cannot pay their bills, that leaves already challenged rural health care providers with more risk.

"We already face a shortage of health care providers," Knudson said, noting that rural clinics are carrying more debt on their books and that affects their viability for the future.

The viability of farm businesses is also at stake, researchers say, as farmers face decisions of dipping into their savings, not investing in their farm or taking an off-farm job to secure lower insurance costs. The project is pushing for a wider range of options for farmers, including greater access to government insurance programs, government-sponsored pool insurance, market controls or cost-share options.

The rising costs of health care for individual buyers, about 36 percent of farmers as opposed to only 8 percent of the national population, is saddling agriculture with high costs and little benefit, Prottas said in a Dec. 18 conference call.

"It (the insurance) is not providing farmers with the benefits that health insurance is supposed to provide," he said.

Tim Peterson, a Rembrandt, Iowa, farmer who raises corn and soybeans on 550 acres, estimates half of his family income is paid out in insurance premiums and bills for himself, his wife and their son. The family avoids going to the doctor because of the high deductible on their insurance.

"2007 will be no different, even with the higher price of grain," he said. "Really, we are facing a health care crisis."