Health insurance on the farm

We are self-employed, which means we have to supply our own health insurance.  We’d be far better off financially if I took a teaching job (I have a Master’s in science education and could be certified for grades 6-12), which would provide a base salary and health coverage along with a reliable income, but then we wouldn’t be able to run this farm as the business we want it to be, and wouldn’t be able to spend the time together that we value so much. We and those like us take a real risk in our personal health and financial viability in attempting to make a living independently. Many farm-based folks keep some form of off-farm job partly to acquire or afford insurance, even if that caps their ability to build their farm business (I know of good farmers who had to stop farming because they had children and couldn’t afford the insurance and health costs without a “real” job). Many full-time farmers, especially young and start-up farmers, go without insurance entirely because it’s too expensive (like many I know around here).

We aren’t willing to take that risk. A significant health incident (car accident, major disease, mild but disabling injury) would wipe out our ability to run this farm, and we at least want some protection from the financial impacts of such an event. Keep in mind that it’s far easier for a health situation to ruin our business than an average salaried job; even a broken finger that kept me from doing weeding, harvest, and washing/packing  for a month would be a disaster for us even if it was financially negligible from the health expense point of view.

However, health insurance costs are awful for us. We have a 5-figure deductible in an attempt to keep costs down, meaning in effect we pay all our medical expenses out of pocket, even responsible preventative care like annual checkups. Dental and eye care is entirely on our dime, no coverage of any kind. The insurance is only for ruinous, life-changing incidents like major injuries or diseases, because that’s all we can remotely afford, even with the massive deductible, and even with our extremely healthy and low-risk lifestyle (like only driving twice a week instead of most commuters’ 5-6 days a week, and rarely during dangerous commuting hours). We even joined a smaller Missouri-based insurer that has reduced coverage for expenses incurred out-of-state, in an effort to keep costs down since we rarely travel. Unlike most couples, we’ve chosen not to have children (partly for financial reasons), which again keeps our costs and risks down but isn’t a viable choice for many people who truly want children, as our culture strongly encourages. And yet costs are inexorably rising for no change in benefits.

At the start of 2010, we paid $204/month to cover both of us (Joanna is far more expensive than I am solely because she’s female). In August 2010 that went up to $254. We just received a letter stating that in August 2011 it will rise to $300/month. Nothing in our coverage has changed or improved, and we really have no choice in the matter. We had already gone with the cheapest option we could find, and have no indication the rates won’t keep rising like this.

This is one of the biggest single expenses in our lives, for which we receive no benefits except the potential to not be bankrupted by a disaster, which we effectively would be anyway because a health incident that cost over our 5-figure deductible would wipe out the farm for all practical purposes and force the non-injured person (if that wasn’t both of us) to get some form of job just to support us. In that situation, our business and our lives as we know them would be over.

We loosely supported health care reform because we wanted something to change, to reach a system in which self-reliant entrepreneurs had a fair chance at getting started on their own, without feeling the need to be trapped in a “regular” job just to manage personal risk. Although we have philosophical concerns about the individual mandate, it also seemed the only way for entrepreneurs like us to have a fair chance in the modern world. However, the trend happening in our lives is not what we expected or desired; food prices and farm income will not keep up with this rate of health care inflation.

Keep in mind that to pay $3,600/year in health insurance costs, we have to earn a lot more than $3,600 in produce sales. Our farm business has to earn enough to pay all of the operating expenses of the farm, plus enough to pay for health & auto insurance, and only then can we even think about paying ourselves so that we can pay the expenses that we incur in our personal lives, and only then can we “keep” any of the remaining income. Because we run our farm and household on a low and tight budget, the percent expenditure in our budget for health insurance is especially high. So think of it this way: for every dollar a customer spends at our farm stand (and most spend under $10/week), a significant percentage is going straight to the coffers of the health insurance company which doesn’t give a hoot about our personal healthy and low-risk lifestyle.

It also doesn’t matter that the core activity of our business (selling fresh, healthy produce) has a direct benefit on our personal health and that of all our customers. Our existence, and our choices, make the country a healthier (and thus cheaper for the insurer) place. Yet none of that factors at all into the cost of our, or anyone else’s, health insurance. We could run a tobacco factory and eat fast food three times a day and still be treated the same by the health care industry.

The final frustration here relates to my earlier point that many other farmers either don’t have insurance or get it through an off-farm job. It’s not my place to fault either decision, but it does affect the economics of prices and marketing. Someone who isn’t trying to pay health insurance, or who has it provided through an off-farm job, isn’t trying to earn that through their farm business, which means they can (and do) charge lower prices and/or make more personal profit (that extra $300/month would be wonderful for us). The former is in effect gaming the system, since if they do get injured the system will still handle them (the classic uninsured problem), while the latter is more responsible but really isn’t improving the sustainable economics of small farms and local foods. We’re being responsible citizens by insisting on having health insurance even at ruinous cost, but we earn far less personal income and get no benefit in the marketplace for that decision, just sniffs that our prices are too high. I can’t exactly put up a sign saying “buy from us because we’re responsible citizens”.

Related to this issue is auto insurance. Consider two periods in our lives. First, the several years when Joanna was working at a 30-mile roundtrip commute year-round, and I was on the farm and driving 25 miles roundtrip to market on Saturdays during growing season. So one of us was on the road six out of seven days for most of the year. Second, the period when Joanna came home and we went full-time, so that now we drive to town twice a week during the growing season (Tuesday restaurant deliveries and Saturday market) and once or twice a month during the winter, mostly during off-traffic hours. One guess as to which period has higher rates. When we went full-time and listed both of our vehicles as business use, as that was now their primary function, our auto insurance rates doubled, even though we’re driving far less and during less dangerous times. And we’re both very cautious, careful drivers with perfect life records. I’m the guy Missouri drivers pile up behind on VV or E because I’m actually driving the speed limit, and the guy who gets cut off on US-63 because I actually leave safe following distance in front of me.  But we’re now paying double our old rates for the sole privilege of being self-employed, in a system that couldn’t care less about our actual driving skill or patterns.

I have a lot of sympathy for the unemployed and underemployed, especially in this recession, but when we look at this budget the cynic in us wonders if we’d be better off not working long days 7 days a week to pay off mostly useless health & auto insurance, and just collecting unemployment or working normal part-time odd jobs while growing only our own food and being uninsured. It would probably be smarter financially than running a responsible, sustainable, honest business whose income is capped by people’s expectations of what subsidized, migrant-picked produce is supposed to cost.

In effect, the current system penalizes good, responsible civic behavior. What are we supposed to do?

9 thoughts on “Health insurance on the farm

  1. Eric, yes, yes, yes.As a self-employed freelancer, I am currently without any health insurance. For me, the choice is between health insurance and being able to pay bills, especially taxes. My tax rate last year was 33%; I have to spend almost $500 a month just to pay Uncle Sam and Uncle MO Sam. I too am healthy, but as a 50+ year old female who has only ever been hospitalized once in my entire life, my health insurance would be about $250 a month. I don't know about you, but I find it highly ironic that the politicians keep waxing poetic about how they want to support small business and entrepreneurs are the future of this country. Yet we pay the most ruinous tax rate AND the highest insurance rates. By the time I pay my taxes, I am barely above the poverty level on income.Irony much?

  2. Yep, we're on the same page. Plus it takes us solid weeks to do our taxes personally, a devil's choice between wasting our time and wasting hard-earned money to pay an accountant at a far higher hourly rate than we make ourselves, just another factor sucking the life out of small businesses.It's bull@#^%$.

  3. I wonder how many people stay with a job to keep their health insurance when they would rather be self-employed (at least in better economic times). Given that small business owners are overwhelmingly Republican, I would think that the Republicans in Congress would support universal insurance more strongly than Dems. It's ironic, to say the least. I carry long-term care insurance (self-funded) so my wife won't be burdened in the future, should I decline. MetLife is seeking a 45% increase in premiums, after a 25-30% increase last year. Another reason for health care reform. The current system discourages responsible behavior. Odd that those politicians who want to dictate personal (sex, drugs and rock'n'roll) behavior so that it's "responsible" don't have many qualms about encouraging irresponsible economic behavior.

  4. I'm struggling with the same question. If I get a full time off farm job then the farm will not grow. If I try to do without the off farm job I have to go without insurance and security. In the meantime, our local Farmer's Market is populated with vendors who are retired and "do this for fun". So there is always someone ready to sell their product for about the same as it cost them to produce. I thank God every day for my CSA clients. They keep us afloat.

  5. Frank,I wholeheartedly agree that this should be a conservative priority, and am disgusted that it isn't. It's the sort of real-world, nuts and bolts issue that actually matters, and would make a huge difference in supporting and encourage American ideals. Instead we have a clown show.Amy,That's our farmers market too, even in a bustling college town, and a primary reason we're moving toward CSA instead. The profit margin on fresh food is too narrow to take on any more risk than necessary.

  6. I had really, really hoped to be able to afford insurance this year. Until I realized that I had underestimated my taxes last year to the tune of almost $2,000.I will admit to being very bitter over the fact that big corporations and the wealthy pay far, far fewer taxes than I do, and that my tax burden totally negates any chance of actually getting health insurance.

  7. The ultra scary thing is that with all the money you pay and effort you put it in, the insurance type you describe would not count as insurance under the "Individual Mandate." You will be required to have a policy which has those preventative items included. How the heck are small business people supposed to be able to afford that?

  8. Robin,My wife and I paid over $5000 a month in federal taxes alone last year. I guess that makes us wealthy in the eyes of many (we make around $200,000/yr). You paid $500 and month, yet you say you are paying "far, far more in taxes" then the wealthy. Sorry if I don't see it that way.I feel for those struggling to pay for all of lives expenses, but I am getting very tired of many feeling the "wealthy" need to foot more of these bills for them. I'm sorry, but I think I am paying my share.One last thing. I work in health care and agree that the expenses have gotten out of hand. But I want those of you without insurance to keep one thing in mind, absorbing the cost of your health care when you get ill is a big reason for the rising cost. You are not without blame in this issue.Eric, I thank you for doing the responsible thing and carrying health insurance. I wish there was a good way for farmers to band together to purchase insurance at a more reasonable cost. That really should not be that hard for the state of Missouri to do with or without the federal government.

  9. I think this gets the Best Comment Thread award for this blog; many different and useful perspectives.Latest Anon, I think it's fascinating to look at how different people define "wealthy". To me, $200,000/year isn't really "wealthy", it's just "successful" or "stable". Maybe that's becuase Joanna and I, as graduate-educated scientists, could likely haved reached that level together if we'd stayed on that career path instead of choosing this instead. The fact that we make 1/10 that now isn't an indictment of those who do, it's an indictment of a system which doesn't value what we do. To me, "wealthy" as a perjorative doesn't really kick in until the stage where the pay/income isn't anywhere near relevant to the work or value created relative to other jobs, or to the individual's specific skill set and contributions.To many folks, the idea of paying "more" or "less" taxes relates more to the percent of total disposable income than a straight amount, but even that is a slipppery slope to play with because there are too many variables in individuals' lives. Regardless of who pays how much taxes and whether they should pay more/less, the basic problem is that the tax system and government overall is so inefficient and tangled up that a huge amount of waste and intertia is created, thus making everyone frustrated with the system. I would be livid at having to pay $5,000/month in taxes, primarily because I'd know how much was being wasted, rather than getting a good return on the investment. Effectively the same reason I'm pissed at our health care costs; I don't feel I'm getting my money's worth, theoretically or practically.Regarding your idea on MO farmers insurance, one barrier is that to most Ag types, we aren't really farmers. You have to have combines or cattle to be a farmer. Even the USDA plays that game, considering fruits & vegetables Specialty Products and mostly ignoring them in favor of the commodity du jour. So it would take a real cultural change to extend anything farmer-related to people like us.