Securing health coverage is more challenging when your business is in a rural community. The health plan options are limited, the costs are higher, and if your local providers are out of network, you’re out of luck. A direct plan offers a simple alternative, and it can also save rural employers significant money.
Why Rural Employers Face Healthcare Challenges
Securing affordable healthcare coverage is a challenge for all employers right now, but for rural employers, it’s especially difficult.
The U.S. Census Bureau says that around 60 million people live in rural parts of the U.S. That’s around one in five Americans. Many farms, ranches, manufacturers and other businesses operate in rural communities, and their employees need health insurance just like their counterparts in the cities.
However, because the population is spread out, there typically aren’t as many healthcare resources. Rural communities often have few choices when it comes to hospitals, clinics or doctors, and they may also have few health plan options.
The lack of options leads to serious problems:
- Healthcare is more expensive. Competition helps keep prices down, and in the absence of competition in rural areas, prices tend to rise. Both insurance coverage and the prices charged by local providers can be higher. According to The Commonwealth Fund, 36% of rural Americans report that they have skipped necessary medical care due to costs.
- Plan changes can wreak havoc. Let’s say you’re enrolled in a health plan with one in-network hospital within a 30-mile radius of your company and your workers. Halfway through the year, the hospital quits the network, leaving your workers without anywhere in the vicinity to get covered care. Midyear network changes are frustrating for all health plan members, but when you’re in a region with few provider options, a network change can leave you in a serious bind.
- Employers have little plan flexibility. Employers may want to provide robust health benefits to support their workers, but with few options to choose from, they may not have access to any plans that meet their needs. For example, you may want to give your workers coverage for child delivery with low out-of-pocket costs, but if no plan offers this, your hands will be tied.
Telemedicine Is One Solution, But it Has Limits
For employers struggling with a lack of local healthcare providers, telemedicine provides a convenient solution. Telemedicine also tends to be cost-effective, making it even more appealing to both employers and employees. According to the Rural Health Information Hub, telemedicine can deliver a wide range of healthcare services and programs effectively, including chronic care management, remote patient monitoring and virtual visits. Telemedicine is also useful for many different types of healthcare needs, including mental health.
However, telemedicine is not always a practical alternative to in-person care. Sometimes, people need to see a provider face-to-face, especially during medical procedures. A lack of a reliable internet connection can also become a barrier to telehealth utilization. The U.S. Government Accountability Office says that at least 17% of people living in rural areas lacked broadband internet access in 2019, compared to just 1% of people living in urban areas. Due to these issues, workers still need health coverage that gives access to local providers.
For Rural Employers, Fully Funded Plans Frequently Fall Short
Frustrated with the group health plan options available to them, a growing number of employers have embraced self-funding.
According to the Peterson-KFF Health System Tracker, enrollment in self-funded large and small group health insurance plans has increased from just over 110 million in 2013 to more than 126 million in 2023. Around two-thirds of all covered workers are now enrolled in a self-funded plan.
For rural employers, self-funding is especially appealing. You don’t need to accept the limited health plan options available in your area. Instead, you can design a plan that actually meets your needs and makes sense for your community.
Self-funded employers are accepting a hands-on role in health coverage, and this involves some risk and responsibility. However, with options like third-party administrators, stop-loss coverage and group captives, the risks can be controlled, and employers with as few as 20 employees can participate.
Direct Plans Connect Rural Employers with Local Providers
In a fully funded health plan, the carrier typically maintains a network of covered providers. Self-funded employers have to maintain their own network or leverage an alternative strategy to provide access to care while controlling costs.
One effective way to do this is to contract directly with the providers in your area through a direct partnership plan.
With a self-funded direct partnership plan, you can remove friction by eliminating the carrier middleman and working directly with community providers.
The employer and providers can work out an agreement that provides coverage while being fair for all parties involved. In a rural areas with limited providers, this model works especially well. Health2Business (H2B) coordinates the arrangement and facilitates direct contract relationships for self-funded health plans.
How One Rural Employer Saved Nearly $500,000 in Four Years
Like many rural employers, Wada Farms struggled to offer affordable health coverage, and high costs led to low participation rates. In need of a better solution, Wada Farms worked with Health2Business to negotiate a contract with a local hospital. The resulting direct plan delivered:
- 30% premium savings in the first year, with no increase in years two through four, resulting in employer savings of nearly $500,000.
- 95% employee participation rate.
Learn more about how a direct plan worked for Wada Farms and its employees.
Is a Direct Plan the Solution to Your Rural Healthcare Challenges?
Health coverage isn’t getting any easier for rural employers. Rising costs and hospital closures are reducing the already slim pickings. Employers need another strategy, one that works for them, their workers and their community providers.
Direct plans provide a solution that’s both cost-effective and sustainable. In addition to helping to control healthcare costs, a direct plan gives employers a way to take care of workers with customized coverage. In rural areas with a limited workforce, this is a practical way to attract and retain quality employees.
Health2Business helps small and medium-sized employers realize the benefits of self-funded direct plans. We currently have options in Missouri, Ohio, Kentucky, Oregon and Idaho. Click on your state to see if we have options in your county, and learn more about how direct partnerships work.
