Policy Journal

May 4, 2010 12:37 PM

Health Care Reform and Rural America

When it comes to health insurance and health care in general, farmers have few options. As a result, health care is one of the most costly items in their business operation.

In late March, President Barack Obama signed into law the Patient Protection and Affordable Care Act, which includes a number of provisions to take effect during the next four years. Here's what the new health care reform means to rural America.

Do away with limit caps. The bill will eliminate caps on what insurance companies will cover and prevent them from terminating coverage if you get sick. New insurance plans won't be allowed to use annual limits, and all annual limits will be removed by 2014.

Cap out-of-pocket costs. Plans from state-based health insurance exchanges created by the bill will cap out-of-pocket expenses, such as co-pays and deductibles. "These reforms will help rural families, who pay for nearly half of their health insurance costs out of pocket, and the one in five farmers in medical debt, with their health care bills and provide the peace of mind that they will have coverage when they need it,” according to the White House.

Help families and seniors. Starting this year, a $250 rebate is available for Medicare beneficiaries who hit the "donut hole,” or coverage gap, of Medicare Part D. A 50% discount on brand-name drugs under Part D will start in 2011. Those in rural areas who can't get quality health
insurance will be able to tap tax credits starting in 2014 to help the process. By 2020, the donut hole will be closed.

Hold insurance companies accountable. Starting in 2011, insurance companies will have to submit justification for premium increases, and those companies deemed to have "excessive or unjustified” premium increases may not be able to participate in the health insurance exchanges. The package will also address starting in 2011 what is deemed to be "excessive insurance overhead” via standard nonmedical costs, such as bureaucracy, executive salaries and marketing. If those costs are too high, there will be a rebate for customers.

Address discrimination by insurance companies. Several provisions in the bill are aimed at addressing discriminatory practices by insurance companies, including:

  • denying coverage to individuals, even children, based on preexisting conditions;
  • charging beneficiaries more if they are sick; and
  • limiting jumps in premiums due to policyholders' age.

A temporary high-risk pool will also be established to help protect consumers from medical bankruptcy—a stopgap measure that will serve as a bridge to a reformed health insurance marketplace.

How will the state-based health insurance exchanges help rural areas? In some cases, more than 80% of a market is covered by only one or two insurance companies. The state-based exchanges will "provide the same private insurance choices the President and members of Congress will have, including multistate plans to foster competition and increase consumer choice.”

The effort will also offer "standardized, easy-to-compare information” on the different plans available through the exchanges in a given geographic area so consumers can "easily compare prices and health plans and decide which quality affordable option is right for them and their families.” According to the White House, this will help "one-third of farmers who purchase health insurance directly from an insurance company—more than three times the national average.”

While expanding health care options and availability is a much-needed result, are there enough health care professionals available to serve the need—particularly in rural areas, where hospitals have closed and doctors' offices are also consolidating?

Starting in 2011, the bill will provide $1.5 billion over five years for the National Health Service Corps, which will fund scholarships and loan repayment for primary care practitioners, including doctors and nurses, who work in areas with a shortage of health professionals. There are also resources for medical schools to train physicians "to work in rural and underserved areas, and … a loan repayment program for pediatric specialists who agree to practice in medically underserved areas, such as rural regions.”


Are You a "Midwest Corn Conglomerate?”

If you have invested in an ethanol plant, delivered corn to an ethanol plant or just plain like ethanol as another outlet for your production, then you are, according to Sen. Charles Schumer (D-N.Y.), a "Midwest corn conglomerate.”

That's one of the phrases used by Schumer in a letter sent to a New York State constituent in March in which he expresses his concern about and outright opposition to ethanol.

Schumer opens by saying he shares the writer's concern "about the potential negative effects of this technology.” Ironically, the constituent did not express any concern or opposition regarding ethanol in his letter to Schumer.

But Schumer's attack on ethanol gets even more direct. "Ethanol made from corn has been sold to the public as a panacea—as a ‘green' source of energy, and one that will secure America's future by finally making us ‘energy independent,'” he says, noting that this is "not accurate.”

The Senator reaches into ethanol opponents' bag of tricks when he states that "corn ethanol releases as much carbon into the atmosphere as traditional petroleum fuels. Furthermore, corn production introduces pesticides and fertilizers into the environment. Far from pro-moting energy independence, the shipping and manufacturing of corn ethanol requires as much petroleum as it takes to make the ethanol.”

While noting that the increased production of ethanol using corn has put a strain on livestock producers, he also tosses in the food-versus-fuel argument. To be fair, he backs cellulosic ethanol, but adds this conclusion: "The sooner we can abandon corn ethanol [we can] return corn production to its best use: food.”

While heaping scorn on corn-based ethanol, Schumer is a fan of biodiesel produced from vegetable oils or animal fats. He issued a press release heralding the passage of a Senate measure that would restore the $1 per gallon biodiesel tax credit. While noting the biodiesel tax credit "will cost the federal government $13 billion,” he says it will "produce many more dollars in terms of jobs and economic activity. The result of the tax credit extension will be a net gain for the American taxpayer.”

While critical of corn-based ethanol as negatively affecting the environment, Schumer says, "Beyond being good for the environment, the use of biodiesel provides a shot in the arm to job growth.”

Sen. Schumer apparently needs an on-farm education. He concludes that corn-based ethanol "introduces chem-icals and fertilizers” into the environment even though there are similar production tools used for soybeans.

His claim that biodiesel promotes jobs ignores data from the Renewable Fuels Association (RFA), which says there are 400,000 jobs linked to ethanol (the biodiesel industry employs 23,000 people). While admitting the biodiesel tax credit is a "cost,” Schumer ignores the positive impact to the federal budget from the ethanol tax incentive. According to RFA, the $5 billion outlay from the government on the Volumetric Ethanol Excise Tax Credit and small producer tax credit has been more than offset by $8.4 billion in revenues from the ethanol industry.

This means there is still a lot of educating left to do in Washington when it comes to ethanol. And that education has to start pretty high up in the U.S. Senate.

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