Insurers wary as farm bureau health plans spread

Health insurance companies are pushing back against proposals to allow farm bureaus in more states to sell cheaper, leaner health plans as alternatives to exchange policies.

Lawmakers in Alabama, Florida, Maine, Missouri and Ohio are debating whether to let farm bureaus offer individual and small-group health plans that do not comply with the Affordable Care Act of 2010, which set coverage minimums for health insurance plans. The farm bureaus contend that, because premiums are based on health status rather than income, they are a better fit for agricultural workers whose earnings can be as unpredictable as the weather.

Related: Insurers, providers team up to save exchange subsidies

Farm bureau health plans are already available in 10 states, although they covered just 130,000 people as of 2023, according to the Government Accountability Office, a nonpartisan investigative arm of Congress.

Yet the increased interest at the state level, and President Donald Trump's history of support for farm bureau health plans, association health plans, and alternative forms of health coverage that aren't subject to many federal and state laws, has health insurers anxious about the ripple effects on the market if these plans proliferate.

Critically, farm bureau health plans can reject applicants or charge higher premiums based on health status, whereas actual health insurance companies must accept all comers and can't alter premiums or benefits for people with preexisting conditions under the ACA, the Employee Retirement Income Security Act of 1974 and some state statutes. Moreover, farm bureau plans don't have to meet federal or state benefit standards and can exclude coverage of key services such as maternity care.

Those same attributes, however, are why Republicans at the federal and state level look favorably on farm bureau health plans and other alternatives to traditional health insurance. Fewer regulations on coverage and benefits translate into lower prices — even if those premiums purchase skimpier coverage — at least for people without preexisting conditions.

The health insurance industry broadly opposes the farm bureau legislation in those five states on the grounds that these types of plans siphon away the youngest and healthiest customers from the health insurance exchange risk pools, leaving insurers burdened with sicker people who can't qualify for alternative coverage or need richer benefits.

“The reality is that these types of proposals often lead to adverse selection in state and local markets — which ultimately drives up the cost of care for everyone with insurance — and often exclude ACA requirements and protections for coverage,” a spokesperson for the health insurance trade association AHIP said.

And health insurance companies are already anxious about the looming expiration of enhanced health insurance exchange subsidies at the end of the year, which also is expected to worsen risk pools when healthy people who can no longer afford coverage drop out. "It will skim off the healthy risk and leave a smaller and sicker pool behind," said Sabrina Corlette, co-director of the Georgetown University Center on Health Insurance Reforms.

Blue Cross and Blue Shield of Alabama executives have written op-eds in local newspapers, sponsored social media campaigns and hosted town halls in opposition to a farm bureau health plan. The nonprofit insurer holds an 86% share of the commercial health insurance market in the Yellowhammer State, according to the American Medical Association.

“Farm bureau health plans would not be subject to even minimal guardrails, including being prohibited from canceling their customers who get sick and suddenly incur more claims, nor would they be required to include essential benefits like prescription drugs or mental health services," a Blue Cross and Blue Shield of Alabama spokesperson said. "These 'plans' could also result in Alabamians being discriminated [against] based on preexisting conditions like diabetes or cancer.”

Customers know what they are signing up for, said Whittney Bowers, director of state policy and grassroots engagement at the Ohio Farm Bureau Federation. “We’re certainly not making people line up and say, ‘Okay, who wants this?’” she said.

“I'm sure some people view it as discriminatory, but when you're basing a plan off of income, isn’t that income discrimination?” Bowers said.

Plus, hospitals report that farm bureau coverage reduces the uninsured rate rather than eats into the exchanges. Farm bureaus also require fewer prior authorizations and pay higher rates than marketplace insurers, said Mary Mayhew, president of the Florida Hospital Association.

Despite concern from some corners of the health insurance sector, others see a moneymaking opportunity.

UnitedHealth Group subsidiary UnitedHealthcare administers farm bureau health plans in Indiana, Kansas, Nebraska, North Dakota, South Dakota and Texas, and Wellmark Blue Cross Blue Shield manages the Iowa Farm Bureau Health Plan, for instance. And if Ohio allows the state farm bureau to offer health benefits, it would use the UnitedHealthcare provider network, Bowers said.

UnitedHealthcare referred Modern Healthcare to the farm bureaus, which did not respond to requests for comment. Wellmark did not respond to an interview request.

The Nebraska Farm Bureau, which began offering health plans this year, contends that it enrolls so few people that it does not impact the exchange market. Its health plan had 600 policyholders on Jan. 1, short of its 1,000-member goal, said Rob Robertson, chief administrator. The farm bureau accepted 90% of applicants, he said.

The Nebraska organization felt compelled to establish a health plan after President Joe Biden's administration imposed new rules that limited access to association health plans and short-term health plans, Robertson said. The Nebraska Farm Bureau also recognizes that Trump and the Republican-led Congress may not renew the enhanced exchange subsidies, which would create a need it could fill, he said.

“It's a niche in the market,” Robertson said. “People who don't get subsidies that are in the individual or small-group markets are paying a lot of rates. I don't think it undercuts the insurance industry at all.”