Hoping for Premium Relief

OMAHA (DTN) -- Farmers aren't certain if they would fare better under the health care bill in the U.S. Senate, but they are looking for relief from a steady rise in premiums and wider spread of deductibles they've seen over the past several years.

Matt Stalzer, who farms corn and soybeans with his family near Marshalltown, Iowa, just got a letter from Wellmark Blue Cross in Iowa stating he could see a 14.2% increase in his premiums next year. Stalzer, 34, is single and has an unsubsidized insurance plan that was grandfathered into the Affordable Care Act. If the premium increase goes into effect, he will pay about $8,000 in premiums next year.

"It's kind of crazy how expensive it gets," Stalzer said. "If you are self-employed, it's just terrible."

Young and healthy, Stalzer said he would forego insurance if he didn't have the farm with the rest of his family. "But I have all of these assets to protect, so I have to have it unless I want to risk losing everything," Stalzer said.

The struggle for insurers in rural states is there are too few young people enrolling in health care compared to older residents who have more medical conditions. Wellmark, for instance, is likely to leave the exchange and not sell more individual policies in Iowa. Wellmark leadership has indicated more flexibility is needed in how policies are designed, which is one of the elements of both the House and Senate reform bills. In both bills, states would be allowed to reduce the essential benefits offered in an insurance policy.

Stalzer said he would be willing to buy a policy that doesn't offer all the bells and whistles of an Obamacare plan. He thinks that, too often, people go to the doctor or use benefits under a health plan when it's not necessary. "I think that would lead to a lot of savings in the system," he said.

The Senate bill eliminates both the employer and individual insurance mandate. The House bill eliminates those mandates as well, but also would allow insurance companies to charge up to a 30% penalty for people who drop coverage but then buy a new plan.

The Senate bill also allows insurers to charge premiums five times higher based on a person's age. That doesn't bode well in an industry where the average principal farmer in an operation is approaching 59 years old. The bill would offset some of those possible premium costs by proposing to increase limits on health savings accounts to the amount of a person's deductible and out-of-pocket cap.

The Senate structures tax credits for insurance buyers that are based on age, income and where they live. The tax credits, however, have lower income caps than current law. Along with that, insurers would lose subsidies in 2020 that help offset some costs.

Jerod McDaniel, who farms near Texhoma, Oklahoma, said he would like to see more transparency in health costs, but he's also concerned about the impact of a health bill on rural medical providers. McDaniel said he is paying $20,000 a year for a high-deductible plan for himself and four kids. His rates started rising more quickly after the Affordable Care Act was passed, and he doesn't think the rate increases are finished.

"Is the insurance high because the health care costs that much, or is the health care high because the insurance will cover that much?" he asked. "That's what I think about as an end-user who has to pay for insurance on my own."

Yet, some farmers have already found ways to lower their premiums compared to insurance costs under the Affordable Care Act.

Kyle Goeman, an insurance agent in Clara City, Minnesota, who specializes in health insurance, also has brothers who farm and knows the struggles with health care in south-central Minnesota.

"For farmers who can reduce their income, they can qualify for help," Goeman said.

"We do not have individual plans anymore unless you go through the Affordable Care Act exchange. That's where an individual can pick up coverage, but we have found so many people who have employers who do not want to offer coverage because it's too expensive. So we have had a number of people who are stuck in this gray area because we only have one company and they are no longer taking new enrollees."

Goeman said more farmers and other individuals are signing up for high-deductible short-term medical plans that renew every three months. Short-term medical may run $100 to $150 a month with a $3,000 deductible. Such plans do not meet the minimum essential requirements under the Affordable Care Act, but that's a lot more reasonable than paying $900 a month with a $10,000 deductible that people are being offered by the full-coverage insurer.

"There are people playing that game just to have some catastrophic policy," he said. "They know they are going to pay a tax penalty."

Some farmers are buying those short-term policies just until they can reach eligibility for Medicare, Goeman said. The problem with short-term insurance is pre-existing conditions normally aren't covered.

"We've had probably 10 to 13 farmers do that, and if they have a year where they stay healthy and don't use the deductible, it probably saves them $13,000 to $15,000 in premium."

There are alternatives to actual insurance as well. Matthew Bennett farms near Windsor, Illinois, and does marketing seminars for farmers. Lately, Bennett has been talking more about family living expenses in those events and finding ways to save. In 2016, with premiums, out-of-pocket costs and uncoverable expenses, Bennett said the family spent $37,000. "Because of my income, we did not get subsidies," Bennett said. "After last year, we knew we just had to do something different."

In his own family of seven, Bennett found a way to save thousands by switching from a traditional health insurance plan to a health care sharing plan called Samaritan Ministries. Under the Affordable Care Act, members of such a health sharing plan are not subject to the insurance mandate. Under such a plan, enrollees pay any medical costs under $300 themselves. Bennett said that under the plan, he pays $500 a month, but also gets discounts with health providers as much as 65% because the family is paying cash for doctor visits.

There are a growing number of these faith-based health programs cropping up around the country. They each have specific caps on what they will pay for, and there are a lot more restrictions than an actual insurance policy. These faith-based programs are careful to stress they are not actual insurance. Still, they can provide a health safety net that's more affordable than insurance costs in rural America.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(AG/BAS)

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