Sonny's Corner: Health care reform will be good for rural people

"Sonny's Corner" is a regular column in Prairie Fire, featuring commentary on civil rights and justice issues. Our friend and Omaha colleague, Joseph P. "Sonny" Foster, died suddenly at age 54 in August 2005. He left an uncompleted agenda, as did many of our civil rights and justice mentors and heroes. We shall attempt to move forward on that unfinished agenda through this column.

By Jon Bailey and Virginia Wolking

Conventional wisdom holds that rural people are less supportive of health care reform. Whether it be the conservatism of rural areas, the affiliation of rural areas with the Republican party or rural distrust of government, it is assumed that rural people are not supportive of health reform and thus have less to offer. However, in our work on health reform in rural areas across the nation, including Nebraska, we find the conventional wisdom flat-out wrong and often oblivious to the unique issues faced by rural people and missing the insights they have into reform. Given who is steering health reform in the Senate—Senator Baucus of Montana, Senator Harkin of Iowa, Senator Conrad of North Dakota and our own Senator Nelson, for example—rural issues should be among the most important issues for Congress to consider.

Public opinion measures, such as those done by the Small Business Majority of the self-employed and small business owners in Nebraska, Iowa and other Midwestern states, show that rural people are supportive of health care reform. Rural small businesses are just as or more supportive of many aspects of health care reform, including a public option, than are urban small businesses. In fact, conventional wisdom has missed a compelling storyline in the health reform debate—that rural people and rural communities have more to gain from health reform and more to lose from continuing a dysfunctional status quo and that rural people want something done to change the current health care system.

Over the past year, we have met many rural people who defy the conventional wisdom and have become health care reform leaders, spreading the message of why health reform is necessary for rural people. Jim Knopik, a farmer from Belgrade, Neb., tells a story familiar to many farmers and ranchers—health insurance premiums have become so unaffordable that he considered dropping his coverage in order to meet other expenses. Angel Romero Kiester, a small business owner and mother in Lyons, Neb., tells a story familiar to many small business owners—health insurance premiums are too expensive to buy coverage for all family members, so she goes without.

The stories of these rural people and many, many more like them throughout the nation demonstrate that rural people are in need of a reformation of the current health care system. What will rural people get out of the health reform bills currently being debated in Congress (and adopted in the House)? And, as importantly, what will rural people lose by health reform inaction?

To understand the rural consequences of health reform inaction, one needs to recognize several crucial facts about rural people and health care. Rural people are more uninsured (especially in remote rural areas), have higher rates of insurance on the individual market, have lower rates of employer-sponsored insurance and, on average, have lower incomes.

Allowing current health insurance and cost-shifting trends to continue—that is, allowing the status quo to go unchecked by health reform legislation—will have significant consequences for rural people. Examples include:

* Under current trends, the number of uninsured will significantly increase over the next decade. According to the Urban Institute, by 2019 it is estimated the number of uninsured will increase by 16 percent to 34 percent, with 57 million to nearly 66 million people uninsured. With a total rural uninsured rate currently at 20 percent, a similar increase means over a quarter of rural residents would be uninsured by 2019. And the consequences of inaction could be worse in remote rural areas, those with a population center of less than 2,500—inaction with a comparable increase over the next decade could result in nearly a third of residents in those rural areas being uninsured by 2019.

* Under current trends, the amount of uncompensated care will significantly increase over the next decade. By 2019, it is estimated that the cost of uncompensated care will increase by 72 percent to 128 percent. This shift of costs incurred for the care of those without insurance onto those with insurance is a pernicious “hidden tax” on the insured, causing premiums to constantly increase and making insurance less affordable for individuals, families and businesses. This increase in uncompensated care over the next decade will conservatively cost the average rural household up to $1,206 annually in 2019, up from the current $530.

* Over the next decade, the Urban Institute estimates that the number of those with employer-sponsored insurance will increase slightly or decline by up to 7 percent. This is undoubtedly due to a projected increase in employer premium spending from 72 percent to 106 percent by 2019. As premiums get more expensive for businesses, they are less likely to offer insurance to their employees. This is particularly true in rural areas where employers—especially small businesses—are already increasingly less likely to offer health benefits to employees.

* Under current trends, health care costs to individuals and families will dramatically increase in the next decade. It is estimated that individual and family spending (on both premiums and out-of-pocket expenses) will increase by 46 percent to 68 percent from 2009 to 2019. Of course, we know that no two households are the same, particularly for health care spending. In this respect there is no “average” household—rural people (particularly farmers, ranchers and nonfarm small businesses) are disproportionately dependent upon paying the full freight of their insurance premiums through the individual insurance market, and rural workers also pay higher costs for their health insurance plans as significantly more rural firms that provide health benefits offer plans that include deductibles. The bottom line is that continuing the trend of increasing health care costs for individuals and families will have significant consequences for rural residents and families.

Many of these challenges faced by rural individuals, families and businesses will be addressed by health reform legislation being debated in Congress. Reform legislation has the potential to provide nearly universal insurance coverage to rural residents. The Rural Policy Research Institute (RUPRI) Health Panel estimates that current Congressional health reform proposals will reduce the number of rural uninsured from 8.1 million to 1.9 million, a 4.2 percent rural uninsured rate (compared to a 5.9 percent urban uninsured rate).

Coverage matters, particularly for rural people. Again, unique rural circumstances show why. Rural people receive fewer preventive services, leading to more serious and more chronic diseases and conditions, and overall uninsured Americans receive about half the preventive services and medical care that insured Americans receive. Many common chronic conditions are easily treated but lethal if not diagnosed and controlled through a prescribed treatment regime that may be unavailable to the uninsured. With higher rates of chronic diseases, lower rates of preventive services and lower rates of insurance, rural people are more likely to suffer the consequences of a lack of diagnosis, treatment and control of chronic diseases. Expanding coverage will go a long way in addressing the health issues faced by many rural people.

The high rates of uninsurance in rural areas also affect those with insurance. In addition to the cost shifting of uncompensated care to those with insurance, studies have shown that the insured in communities with high proportions of those without insurance are more likely than those elsewhere to have difficulty obtaining needed care and be dissatisfied with the care they receive. According to the RUPRI Health Panel, higher rates of uninsured strain rural emergency services, diminish access to trauma care and reduce the number of providers willing to offer emergency care in rural communities. If maintaining the status quo leads to nearly a third of rural people being without insurance, these consequences will significantly affect all rural people—insurance coverage or not.

Proposed health insurance reforms and regulations, such as guaranteed issue, prohibiting exclusion due to pre-existing conditions, rescinding health insurance when one gets sick and uses the insurance, will also address many unique rural issues. Taken as a whole, the insurance reforms contained in both the House bill and the Senate proposal will provide needed relief for many rural people and families. They remove barriers to coverage that exist due to the disproportionate number of rural people who have nongroup coverage, and they protect a population that is, on average, in poorer health.

Excluding coverage due to pre-existing conditions is a significant barrier to health insurance coverage in rural areas. A greater dependence upon small group and individual health policies for an older and sicker population leads to greater potential for pre-existing condition exclusions. Prohibiting the practice of excluding coverage for pre-existing conditions has the potential to benefit many rural people and expand access to health insurance in rural areas.

Similar barriers would be removed by legislative proposals to guarantee issue of health insurance, forbid health status as a component of premium rating and requiring continuous coverage. According to RUPRI, all these reforms would “maintain or increase access to insurance for individuals with medical conditions or other reasons that might increase insurance risk.”

The benefits of expanding coverage, of course, are greatly dependent upon the critical question of making coverage affordable. That is particularly true for the third of households in rural America with annual incomes below $35,000. Many of these people are self-employed or work for small firms that cannot afford to offer health benefits. Requiring people to have insurance they might not be able to afford—as both the House bill and Senate proposal require everyone to have some sort of health insurance coverage—is both bad policy and immoral.

That is why the forms of premium assistance in health reform legislation are crucial. How premium subsidies and tax credits work is especially important for rural people, who are more likely to be self-employed (both on and off the farm) or work for small businesses and who have per capita incomes that are 70 percent of urban incomes (76 percent in Nebraska). Community Catalyst, a national health care consumer advocacy organization, estimates that a family of three at 200 percent of the federal poverty level (slightly over $36,000 per year) will spend 11 percent of their income on total health care costs (premiums and out-of-pocket costs) under the House bill, but 17 percent under the Senate proposal. The Senate bill treats those with higher incomes—those between 300 and 400 percent of the poverty level, or about $55,000 to $73,000—slightly better than does the House bill. Eventually, we believe it will be important to take the best from both bills and meld them to provide affordable, meaningful coverage to all families.

The health reform bills under consideration in Congress are by no means perfect. A final bill needs to make sure subsidy levels provide affordable, meaningful coverage for all. Details on ratings for premium levels will be important for rural areas to ensure affordable coverage. Certain provisions need to be implemented quicker so that everyone sees more immediate benefits from the eventual legislation. And provisions that seek to lower overall health care costs must be implemented correctly. But the bottom line of health care reform is the lives of people and families. It is estimated that 22,000 to 45,000 people die each year because they did not have health insurance. If Congress is concerned about 10-year costs of this bill, then here is another cost to consider: 220,000 to 450,000 Americans dying prematurely for a lack of health insurance, many in rural families because of the unique challenges faced by rural people in obtaining health insurance. Add the thousands and thousands of families facing health care-induced bankruptcy that would be helped by access to affordable, meaningful coverage, and the message is clear—many people will be helped by these imperfect but good bills that represent a good start to reforming a dysfunctional health care system.

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