Health Insurance Exchanges that Work for Rural American Families Report examines exchanges as Affordable Care Act sees its first anniversary of passage
Lyons, Nebraska – The Center for Rural Affairs will release a new report that looks at how health insurance exchanges, one of the primary features of the Patient Protection and Affordable Care Act, will benefit rural individuals and families.
Entitled, Health Insurance Exchanges That Work for Rural, the report examines some of the important rural issues and considerations in establishing state health insurance Exchanges — health insurance marketplaces with the purpose of helping individuals and small businesses access affordable and quality health insurance.
“As the first anniversary of the Affordable Care Act being signed into law arrives, we believe it is crucial to reflect on what the Act really does… what it actually has to offer, especially to rural Americans who have faced stern challenges in finding and accessing quality, affordable health care coverage,” said Jon Bailey, Center for Rural Affairs Rural Research and Analysis Director and author of the report.
The Affordable Care Act requires states to have an operating Exchange by January 2014. States have the authority to create two exchanges — an American Health Benefits Exchange for individuals and a Small Business Health Options (SHOP) Exchange for businesses with up to 100 employees.
“Exchanges will benefit everyone, but since rural areas have high numbers of people without health insurance, have vastly higher numbers of people who purchase health insurance on the individual market and have more small businesses — as well as farmers and ranchers and many other self-employed individuals — the Exchanges will be crucial for access to affordable, quality health insurance in the countryside and in our rural communities,» explained Bailey. “Many of the questions and issues facing states as they develop their Exchanges are important to making Exchanges work for rural people.”
This report identifies issues with the exchange system that will affect rural areas, for example:
Outreach to rural residents… Section 1311(i) of the Affordable Care Act provides that Exchanges shall establish grant programs for outreach to the public for education, enrollment information, to facilitate enrollment and referrals for grievances, complaints or questions. This outreach and the information it provides will be very important for rural residents.
Outreach in rural areas is challenging for a number of reasons. Residents are scattered across vast expanses of land, making personal or community outreach difficult. Communication vehicles in rural areas are limited and different than in urban settings. Resources dedicated to rural outreach are also limited. Grant programs established pursuant to Section 1311(i) of the Affordable Care Act should also be written to specifically address rural outreach initiatives and some portion of grant resources be made available to implement rural outreach initiatives…
Rating areas… Section 1201 of the Affordable Care Act allows for geography to be used as one of the factors that insurance companies may take into account when assigning insurance rates. Lower population density and smaller overall population sizes may lead insurers to charge rates in rural areas that are higher and ultimately unaffordable for rural residents, especially low-income rural residents. Small premium rating areas would disadvantage rural areas, so rating areas in plans offered through Exchanges should be at least statewide. In states with particularly small populations, interstate rating areas should be allowed…
Making the Exchanges attractive to rural employers, small businesses and the rural self-employed… Small businesses and self-employed individuals make up a substantial percentage of the rural population compared to urban areas. Historically these workers have the highest likelihood of being uninsured due to the high cost resulting from very small risk pools. Because of the importance of small businesses to the rural economy and to rural communities, Exchanges must be attractive to small businesses employers in order to be successful in rural areas…
Exchanges must be structured to ensure that rural small businesses can pool their employees with other small businesses in order to spread the risk and lower insurance costs. Regulations should create incentives for states to create one insurance pool, and allow people buying in both the individual and the small business market to be captured in that one insurance pool. Such a structure will be extremely beneficial to rural small businesses and their employees and families. The opportunity for broader pools will address many of the issues that lead to high rates of uninsurance and underinsurance in rural areas…
Exchange governance… Existing state agencies, new state agencies or contracts with a nonprofit entity are the administrative options provided by the Affordable Care Act. Whatever option is selected by the state, there is likely to be some sort of governing or advisory board for the Exchange. These boards should include broad representation of state agencies with which the Exchange must work, interested parties and those with expertise on matters of importance to the Exchange. Exchange governance should include geographic diversity, including rural representation, and representatives from those who will purchase health insurance through the Exchange (primarily the self-employed and small businesses).
“Almost all states are in the process of developing their Exchanges with an eye toward having them ready in 2012 or by early 2013. A health insurance Exchange is a new undertaking by most states — Massachusetts, Utah, Washington, Connecticut and California are the only states that have some form of exchange already established,” added Bailey. “Given the newness of this state function, state policy-makers have many questions to answer and issues to address.”
According to Bailey, rural places and the residents of them have unique circumstances that must be considered and addressed in the development of Exchanges, state-based or otherwise. By their very nature rural places and their residents are more isolated. That is particularly true of low-income rural residents. Information about Exchanges will be difficult to spread to these populations without a specific emphasis and significant resources.
“For example, conventional wisdom appears to be that Exchanges must be web-based to be effective and efficient. This may be true for the largest number of people across the nation, but it is not necessarily true for many rural residents. Generally, rural people have less access to high speed telecommunications technology. Again, that is particularly true for low-income rural residents and residents of remote rural areas,” concluded Bailey.