The word audacious has a double meaning.
Depending on whom you talk to, either definition might apply to the way the Kansas Farm Bureau is proposing to rescue farmers and ranchers priced out of the health insurance marketplace set up under the federal Affordable Care Act.
It’s either a bold and daring move. Or, it’s presumptuous, bordering on brazen.
The powerful ag lobbying organization is petitioning lawmakers for what amounts to carte blanche authority to develop and market health coverage free of state and federal oversight.
Opponents are warning of dire consequences for consumers if lawmakers okay the proposal.
But Terry Holdren, CEO of the Kansas Farm Bureau, said the failure of traditional insurers and government to address the plight of farm and ranch families left the organization with little choice but to step forward with a potential solution.
“Had current providers in the marketplace taken the initiative to… develop more affordable solutions, we wouldn’t be here today,” Holdren said Wednesday in testimony to the Kansas Senate committee considering the Farm Bureau’s bill.
Most farmers and ranchers make too much to qualify for federal subsidies that help low-income people purchase individual coverage in the ACA marketplace, Holdren said. Still, many can’t afford the rapidly rising cost of non-group coverage.
In his testimony, Holdren cited a national survey in which 65 percent of farmers identified the cost of health insurance as the “most significant threat” to their livelihood.
It’s a big worry for Tim Franklin, who grows corn and wheat on a fourth-generation family farm near Goodland. Testifying in favor of the Farm Bureau bill, Franklin told lawmakers that he’s paying nearly $24,000 in premiums this year to cover his family. Out-of-pocket expenses could amount to another $10,000.
“To say that providing workable and affordable health coverage for our family is challenging is a bit of an understatement,” Franklin said.
Insurance that isn’t
The bill under consideration would allow the Farm Bureau, which already sells property and casualty insurance, to market health coverage that isn’t technically insurance.
That technical distinction would exempt the organization from federal rules that, among other things, require insurers to offer coverage to anyone regardless of the health status.
“This legislation… would give us the ability to say ‘no’ to folks if they don’t meet our underwriting standards,” Holdren said when briefing members of the Legislature’s Rural Caucus.
In addition to rejecting people with costly, life-threatening conditions such as heart disease and cancer, Farm Bureau could deny coverage to those with chronic ailments like diabetes and high blood pressure.
The ability to screen policyholders — a standard insurance company practice prior to enactment of the ACA — would help keep the cost of Farm Bureau plans relatively low, Holdren said.
“We believe that we can offer products to our members that are 30 percent or lower than the cost of Affordable Care Act products,” he said.
The ACA requires insurers to cover “10 essential benefits.” In addition to hospitalization and preventive office visits, they include maternity care, emergency services and prescription drugs.
Exactly what the Farm Bureau plans would cover hasn’t been decided, Holdren said. But, he told lawmakers, it was safe to assume they would include many but not all of the ACA-mandated benefits.
Playing by different rules
Blue Cross Blue Shield of Kansas, the state’s largest insurer, is urging lawmakers to reject Farm Bureau’s proposal.
“We think the whole concept is unfair,” BCBS lobbyist Brad Smoot told the Senate insurance committee.
Unfair to both consumers and other insurers because it would allow the Farm Bureau to set prices based on its ability to reject potentially costly applicants.
“Nobody else can do that,” he said.
Likewise, Smoot said, the Kansas insurance commissioner would have no authority to review the Farm Bureau’s rates or resolve consumer complaints.
“I just wonder who they’re going to call,” he said. “If they can’t call the insurance department, they may have to call you (lawmakers).”
Rising health care costs are pushing up the cost of coverage, Smoot said. Allowing a single player in the marketplace to suspend the rules and return to practices that exclude those who most need coverage won’t solve that problem, he said.
Medica, a nonprofit Minnesota-based insurance company that competes with BCBS in Kansas’ ACA marketplace, is also fighting Farm Bureau’s entry into the market.
Noah Tabor, a lobbyist for the company, said allowing the ag organization to “siphon” healthy people out of the insurance pool would force costs up for everyone else and leave people with preexisting conditions fewer affordable options.
“What about the farmer with cancer?” Tabor asked members of the committee. “Who is going to stand for him or her?
“We encourage the committee to look at options… that include all Kansans,” he said.
Those options include several bills under consideration that would make it easier to establish and participate in association health plans, which Tabor said would be subject to state and federal rules.
Medica is working with the Nebraska Farm Bureau to gain legislative approval for such a plan, he said. The Iowa Farm Bureau is also seeking legislative approval to market plans exempt from state and federal rules.
The Tennessee Farm Bureau has sold coverage since the mid-1990s similar to what its Kansas counterpart is proposing. It provides similar levels of coverage to traditional health plans at lower costs because it can exclude applicants with preexisting conditions.
Jim McLean is the senior correspondent for the Kansas News Service, a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio covering health, education and politics. You can reach him on Twitter @jmcleanks.
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