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Study: Health Care Costs Consume Big Slice of Farmers' Income

By Ben Weyl, CQ Staff

September 17, 2008 -- At a time when food prices are on the rise, farmers across the country are finding cold comfort in their bounty: health care costs are drastically eating away at their income, leading many to financial hardship, according to a new report.

Even though the Agriculture Department estimates food prices have increased 5 percent to 6 percent in 2008—the largest annual jump since 1990—nearly a quarter of farmers surveyed, 23 percent, said health care costs contributed to financial problems for them and their families.

The 2007 Health Insurance Survey of Farmers and Ranchers produced by The Access Project and sponsored by the Robert Wood Johnson Foundation showed that farm families spent an average of 42 percent of their income on insurance premiums and out-of-pocket costs.

Though nine in 10 respondents had health insurance throughout the previous year, fully 44 percent spent more than 10 percent of their annual income on premiums and out-of-pocket costs, according to the report.

Farmers are hit hard in part because they often purchase health insurance from non-group plans, which are usually more expensive. People insured on the non-group market spent a median of $11,200 on premiums and out-of-pocket expenses; those who received insurance elsewhere paid half that, according to the report.

"Unaffordable health care costs saddle people with medical debt and threaten their long-term security by draining their savings and money set aside for retirement and other long-term needs," Bill Lottero, field director of The Access Project and a co-author of the report, said in a news release.

Indeed, 26 percent of those surveyed had to draw on resources to pay for health care. Of those, 65 percent spent some of their family savings and 10 percent withdrew from their retirement accounts; 22 percent incurred or increased credit card debt, according to the report.

"Not being able to pay medical bills affected my credit history, which affects everything else," answered one respondent to a survey question. "I wish that someone could offer health insurance that is not going to break the bank and still pay for office visits, prescriptions," said another.

With a new Congress and a new president likely to consider changes to the current health care system, the report's authors hope that those who will set policy use these findings to guide them.

"Farmers and ranchers, like millions of small-business owners, face serious obstacles paying for health care coverage that is both comprehensive and affordable," said Risa Lavizzo-Mourey, president and CEO of the Robert Wood Johnson Foundation, in a statement. "This study can help policy makers think about this as they consider health reform."

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