Ag businesses, farmers seek answers on health care

This is the second in a two-part series on the challenges that rising health insurance costs pose to U.S. agriculture. The first part, published in the March 24 issue of Agweek, focused primarily on one farm family.

WISHEK, N.D. - Like other agricultural business owners, Troy Scherr understands the value of offering health insurance to employees. And like most other business owners, he's struggling with escalating costs that make doing so increasingly difficult.

"We want to attract and retain key employees. Having health insurance is a big part of attracting good people. And it's a big part of retaining good ones," says Scherr, co-owner of Sayler Implement, an independent John Deere dealership with locations in Linton and Wishek, N.D. "But it just keeps getting more and more expensive."

Scherr says the premiums he pays for employees' health insurance have doubled in the past five years. Increases of that size are common, people involved in ag say. They also say that as costs soar, health insurance has replaced markets and weather as many agriculturalists' biggest concern.

Now, with the Trump administration and Congress struggling through contentious changes to federal health care policies, there's uncertainty about what will - and should - come next. But Scherr speaks for many in ag when he says, "I don't know what the solution is, but something needs to be done."

Some in ag think that farm organizations, such as grower groups, can provide part of the answer.

Theresia Gillie, a Hallock, Minn., farmer and president of her state Soybean Growers Association, says the organization is researching a large group health insurance plan that would be "viable for our members."

Initially, she hoped her association would have a plan developed by this summer. But the process is complicated, and the goal now is to have something to announce by early 2018, she says.

Ag concerns

Health insurance is a huge concern for Americans in general. But it may be particularly worrisome in agriculture:

• 10.7 percent of U.S. farm households had no form of health insurance, compared with 9.1 percent of the general population, according to a 2015 U.S. Department of Agriculture study.

• Farm households are slightly more likely than their general population to secure their own insurance, rather than obtain it through an employer, according to the USDA study.

• Historically, many important decisions - such as whether to enter farming or stay in an off-farm job - have been affected by health-insurance availability. As health care concerns grow, that influence intensifies.

• Some health insurance providers are pulling out of rural areas, reducing the number of options for agriculturalists and ag businesses that live or operate in them.

• Rising health insurance costs, coupled with low crop and livestock prices and poor farm profitability, leave farmers and ranchers less money to spend at their local businesses.

"The more they have to spend on health care, the less they can spend here at the dealership," Scherr says of his customers.

Rising insurance and medical costs also stress small rural health-care facilities and other small-town businesses, Gillie says.

Encouraging so-called "telehealth" is especially important in rural areas with limited health care, says Jordan Feyerherm, a project organizer for the Lyons, Neb.,-based Center for Rural Affairs. His organization describes itself as "unapologetically rural. We stand up for the small family farmer and rancher, new business owner, and rural communities."

Trouble is, insurers see telehealth as a "lower-cost service" and want to pay less for it, he says.

Looming physician shortages in rural areas strengthens the need for telehealth and puts even more stress on rural health care and insurance, Feyerherm says.

He also says that while the Affordable Care Act, also known as Obamacare, has received heavy criticism, it has allowed some farm families to obtain health insurance.

"I know small farmers in rural Nebraska who (before the ACA) didn't have health insurance or only had catastrophic and never went to the doctor," Feyerherm says.

'Changing marketplace'

Concerns about health insurance affordability are nothing new, says Shawnee Christenson, owner/agent of Crosstown Insurance in New Hope, Minn., and president-elect of the Minnesota Health Underwriters Association.

Pat Bellmore, chief marketing officer for Blue Cross Blue Shield of North Dakota, recalls such concerns when he was a young field representative 32 years ago.

"We're constantly working with federal and state lawmakers to find alternative solutions for a more competitive marketplace, while also keeping in mind the need for affordability. It's an age-old issue," he says.

Denise Kolpack, the organization's senior vice president of brand strategy and communications, says the Blues are "committed to work with provider partners to reduce health care inflation."

Nonetheless, the Affordable Care Act created what's "definitely a changing marketplace," Bellmore says.

Consumers need to "take a look at all the plans that are available and what ones might fit their needs," he says. "Do your due diligence."

Farmers can be eligible for an advanced premium tax credit that lowers the cost of health insurance, Christenson says.

But the credits, if any, are based in part on estimated income for the coming year. Annual farm income can vary greatly and unpredictably, so a taxpayer/farmer might need to repay the credit if he or she has a good year financially, Christenson says.

Bigger deductibles

Health insurance premiums have soared for years. In recent years, however, the percentage increase of premium costs have slowed, with the size of deductibles rising relatively faster, says Michelle Long, a policy analyst with the the Kaiser Family Foundation in Washington, D.C. The nonprofit organization focuses on major health care issues facing the nation and conducts annual surveys of health care costs.

By all accounts, consumers, both in and out of ag, are selecting options with higher deductibles to limit the increase in premiums.

"Just about everybody has these high deductibles now, and they're paying a lot for premiums, too," Gillie says.

A 2016 survey by the Kaiser Foundation found the size of deductibles in employer-provided plans have increased an average 67 percent since 2010.

There aren't a lot of hard statistics on how much farm families and ag businesses and their employees pay for health insurance. But Long says the 2016 Kaiser survey came up with these numbers for employers in the ag, mining and construction sector that provide health insurance for their workers:

• An average annual cost of $6,400 for single-coverage premiums, with employees paying an average of about $1,100.

• An average annual cost of about $18,000 for family-coverage premiums, with employees paying an average of slightly more than $5,000.

Young aggies

Health insurance is a concern for just about everyone involved in ag, but young farmers appear to be at particular risk. Farmers and others say young aggies, like young adults in general, sometimes go without it, especially when faced with other pressing financial needs.

Bobby Jones, 30, realizes that health insurance is a big deal. Even so, he and his wife, Chelsea Losh-Jones, 29, don't have it.

"It's been an issue since our son (Tripp, now 2½) was born," Bobby Jones says.

The couple launched Babe+Sage Farm, a small vegetable operation - which Jones says provides "enough (income) to make a living off of" - in Gordon, Ga., in 2011. The name comes from a line in a poem by William Henry Channing, and doesn't refer to either Jones or his wife.

Jones says his young family has a "long, complicated health insurance story." When he and his future wife started the farm, he didn't have coverage but Chelsea, unmarried at the time, was still young enough to be covered for a year under her parents' plan.

Later, the two were without health insurance for a time, then obtained it through the ACA.

"We got a subsidy and had coverage we liked," Bobby Jones says.

Then Tripp was born and the family went from a two- to three-person household. Under scratch-your-head, hard-to-explain provisions in Georgia law, Jones and his wife no longer qualified for a subsidy, and so they lost their coverage. Tripp is covered, however.

"It's specific to our state," Jones says. "We're not eligible for Medicaid, but we're also not eligible for a subsidy."

Jones says he and his wife, in the time they've been without insurance, have been "pretty lucky. We've been relatively healthy." Even so, he's had two on-farm accidents that required trips to the emergency room.

"Without insurance, it gets expensive real fast," he says.

Jones and his wife have obtained what he calls "an accident policy, a supplemental insurance policy. It's not a health insurance policy. It's pretty cheap and pretty limited."

He's uncertain when he and his wife will secure health insurance, but says, "Any business has to be optimistic."

Jones is working with the National Young Farmers Coalition to publicize the problems that young farmers face with health insurance

Young producers nationwide are struggling with health insurance, says Andrew Bahrenburg, national policy director of the Hudson, N.Y.,-based organization.

'Need to come down'

Scherr, in his 17th year with the implement dealership, says young people don't always fully appreciate the importance of health insurance.

"If you're young and single, it's probably not seen as a big thing. But as you get older, as you get a family, kids, it's a big part of your benefit package," he says, adding that his staff, which ranges in age from 22 to their early 50s, is "younger overall."

Though premiums continue to rise, his dealership still pays 100 percent of the cost of individual coverage for its 22 employees. Employees may not always realize the additional cost to the company, Scherr says.

"It's not seen as a raise because you don't see it in your paycheck," he says.

He evaluates the value and cost of health care insurance every year.

"We do have great employees," he says. "I want to pay 100 percent of a single plan" and will continue to do so for the foreseeable future.

Even so, employers can't continue to absorb higher health insurance costs indefinitely, he says.

"I hope the new administration comes up with more affordable health care for everyone. Everybody needs it," Scherr says. "These costs need to come down."

For a list of health care resources, visit http://www.agweek.com/news/nation-and-world/4243240-health-care-and-health-insurance-resources .