The Center for Rural Affairs’ latest report in its rural health care reform series was released at a White House meeting between rural health care stakeholders and Administration officials on May 4. Jon Bailey attended the meeting and presented Causes and Consequences of the Rural Uninsured and Underinsured to Nancy-Anne DeParle, Director of the White House Office of Health Reform, Dr. Mary Wakefield, Administrator, Health Resources and Services Administration, and Rep. Mike Ross of Arkansas, a leader on health care reform in the House of Representatives.

While many similarities exist between urban and rural areas regarding insurance coverage, critical differences exist. Health insurance is particularly important for rural areas as they have populations that typically need more health care. The report primarily examines the dual situations in rural America of higher rates of uninsured and higher rates of underinsured. Being underinsured means that an individual or family has health insurance, but that the health insurance they have is inadequate to cover all the health care costs and expenses the family may incur. Generally, underinsurance is defined as out-of-pocket health care spending that exceeds 10 percent of family income, or less if the family’s income is below the poverty level.

 

With an economic foundation of small businesses, self-employment, and low wage work, rural communities are not well served by a health insurance system that relies on employer-based coverage. Since rates of employer-sponsored or employer-provided health insurance are significantly lower in rural areas, many rural families are forced to purchase from the individual insurance market that often provides less coverage at greater expense. For example, The Access Project has found that over 90 percent of Great Plains and Midwest farm and ranch families have health insurance, but that one-in-three farm and ranch families depend on insurance from the individual market compared to only eight percent of the general population. For many rural families health insurance is bankruptcy protection – they have health insurance only to protect the farm, ranch or small business from the major injury or illness that could put them out of business. Many rural families pay more, get less coverage and suffer poorer health outcomes from the current system.

 

The report also points out that a lack of insurance or a lack of adequate or meaningful insurance has consequences well beyond the out-of-pocket expenses for families. Critics of health care reform argue that it will lead to rationing of health care – but the current system already rations health care; it is estimated that 18,000 people die each year because of a lack of health insurance. Being uninsured or underinsured is also linked to lower overall health status through the postponement of care and necessary, often preventive tests and procedures. Uninsured individuals are more likely to receive expensive care from emergency rooms and are less likely to receive care for primary health problems, which can lead to much more complicated and costly care.

 

These outcomes aren’t just consequences for individuals and families. These costs and poorer health care outcomes must be paid by someone, usually in reduced productivity, higher taxes, higher insurance premiums, and higher health care costs in general. In 2005, it was estimated that there was a $43 billion “hidden tax” attributable to health care services provided to those without insurance or without adequate insurance; two-thirds of this “hidden tax” was paid for by those with private insurance through higher premiums and higher costs.

 

There are also community consequences. The financial stability of community health care providers is put at risk by the uninsured and by medical debt incurred by those with inadequate insurance. Nearly 20 percent of rural counties are at risk of losing their hospital because of financial losses. The financial instability of rural health care providers due to issues of uninsurance and medical debt has a domino effect on the economy of the whole community – the National Rural Health Association estimates that 15-20 percent of jobs in many rural communities are attributable to health care.

 

Reforming the current insurance system is also important if rural areas are to realize their potential in an entrepreneurial economy. Starting or expanding a business includes many financial risks, but the high cost of self-insurance or the risks of going without insurance can be too much. This is particularly troubling for rural areas where small-scale entrepreneurship is so important for economic activity. Elsewhere in this newsletter we applaud President Obama’s proposal to increase funding for the new Rural Microentrepreneur Program. But if initiatives such as that and other efforts to build a rural entrepreneurial economy are to succeed, the health insurance system must be reformed in ways that work for rural people.

 

Unfortunately, all these circumstances conspire to weaken rural communities. A rural community’s economic development, social cohesiveness and health care infrastructure are all threatened by a lack of affordable, adequate and meaningful health insurance. That is why it is so crucial for reform legislation to create options and choices that provide rural small business and the rural self-employed the ability to choose more affordable, adequate and meaningful health care coverage.

 

The full report is available online at: http://files.cfra.org/pdf/Causes-and-Consequences-of-Rural-Uninsured.pdf

 

Contact: Jon Bailey, jonb@cfra.org or 402.687.2103 x 1013 for more information.