In 2011, ERS surveyed farm households about their health insurance coverage. As with U.S. households in general, an important risk facing farm households is illness or injury to household members, with associated medical expenses potentially draining household resources. Health insurance provides individuals or groups with at least partially reimbursement for covered medical expenses in return for a fee. Because medical attention is expensive and often essential for maintaining one's health, the incidence of health insurance among populations is an important indicator of their well-being. It also indicates how much health-related financial risk the household bears.
In 2011 (prior to implementation of the Affordable Care Act of 2010), 15.7 percent of the U.S. population had no form of health insurance. Among members of farm households, only 9.3 percent lacked health insurance.
Most Americans receive health insurance through their employers. Although farm operators are largely self-employed, the majority of farm households have an operator or spouse employed off the farm (see table on health expenditure and insurance coverage information of principal farm operator households, by off-farm work, 2011 ). As with the general population, the most common source of health insurance for members of farm households is employment-based. In fact, farmers are as likely as the general U.S. population to receive their health insurance through an outside employer. Farmers are more likely than the general population to purchase their health insurance directly from an insurance company, and less likely to receive health insurance from a government-sponsored program, such as Medicare or Medicaid.
In 2011, more than half of farm household members had health insurance coverage from an employment-based plan. One major reason that a farmer or rancher would work solely on the farm and not have access to employer-sponsored insurance through an off-farm job is the intensive time commitment for some commodity specializations (see table on Health expenditure and insurance coverage information of principal farm operator households, by commodity specialization, 2011 ). An example of this is in dairy production. Farming is the major occupation for nearly all of those who specialize in dairy production—significantly more than the average of 48 percent of all farm households. Compared to the 57 percent of all farm household members receiving insurance from employer-sponsored plans, only 36 percent of dairy household members were covered by such plans. This, in large part, explains why about 36 percent of dairy household members were uninsured in 2011, compared to 9.3 percent for all farm household members.
Whether a household possesses health insurance and the source of that health insurance are major determinants of household expenses for health care. On average, the most expensive type of health insurance is direct purchase. Farm households with direct-purchase insurance had the highest premiums of all farm households, more than $6,000 per household. They also incurred the highest out-of-pocket medical expenses, spending more than $2,400 in addition to health insurance premiums in 2011.