Rural Residents Get Less For Their Healthcare Dollars

Until now most people thought that Americans in rural states have benefited from lower health costs than people in more heavily-populated areas.

But that’s not the case, according to researchers who conducted the first state-by-state study of the benefits offered by employer health insurance plans.

The findings, recently released in the journal Health Affairs, gauged the “generosity” of plans by calculating the percentage of an employee’s healthcare costs that were covered by their policy.

Rural Residents: Getting The Short End Of The Stick?

Turns out residents in states with fewer residents, like Maine and Wyoming, saw the smallest bang for their healthcare buck. On average, they pay more in premiums every month. But less of their expenses are paid for, and their coverage is more restricted.

People living in urban states — such as California and Pennsylvania — received on average more care for their insurance investment.

The state with the best health insurance value? Massachusetts, where employees saw 88% of their healthcare costs covered by their insurance. The biggest losers are employees working in Iowa, Mississippi and Montana.

Reasons For The Gap In Value

The study’s authors pointed to the wide use of traditional indemnity plans in rural areas. Also called “fee-for-service” plans, the study found that workers with these policies often have to pay up to 25% more than those with HMO-type plans.

Fee-for-service plans give you more flexibility when it comes to choosing doctors and hospitals, but that flexibility comes with a higher price tag. Plus, these plans typically don’t cover preventative care. That leaves families to foot the bill for routine doctor’s visits and preventative screenings.

HMO plans restrict the doctors you can see and hospitals you can go to, but they are overall more generous in what procedures are covered. If you stick to your network, care is more affordable.

HMOs have been criticized in recent years as being to too inflexible in the care they provide. But this study suggests that many people living in rural areas would benefit from enrolling in HMO programs. The affordability of preventative care provided by HMOs could mean improved overall health for rural residents — which in turn means lower medical bills.