PORTLAND OREGONIAN

May 29, 2010

Oregon ag industry sorts health care

Harris Meyer
Special to The Oregonian

Unlike many agricultural employers, Ken Bailey of Orchard View Farms in The Dalles offers his 85 full-time workers health insurance. The orchard and packinghouse operator pays 80 percent of the premium for workers and their dependents.

But like nearly all growers, Bailey's company does not offer coverage to the 600 to 700 seasonal workers it hires for about eight weeks each year to pick cherries and pears on its 2,080 acres. It's estimated that as few as 10 percent of farmworkers nationally have health insurance.

Now, Bailey and other farmers in Oregon and Washington are nervous about the federal health reform law passed in March. It requires employers with 50 or more full-time equivalent workers to provide health coverage starting in 2014 or pay a $2,000 penalty per employee. Bailey, who favored health reform, said he's comfortable with that. Industry groups say most Pacific Northwest growers are too small to fall under that mandate.

But the new law also may require larger farmers and packers like Bailey who meet the 50-employee threshold to offer insurance to seasonal workers or pay the penalty, depending on how the government writes the rules, according to the American Farm Bureau Federation in Washington, D.C. That would be a major new cost for growers already struggling with the bad economy and lower prices for their products.

"It's almost impossible for individual growers to cover seasonals," Bailey said. "It depends on whether there is a reasonable program with a reasonable price." Farmers might even end up paying for coverage of undocumented workers, he said, since they have no reliable way of verifying their workers' legal status because so many documents -- even Social Security cards -- can be faked.

The seasonal worker issue is just one of many uncertainties facing agricultural employers and workers as the complex new health care law is rolled out. On one hand, Northwest farmers and packers fear that new costs imposed by the law will force them to raise their prices, making them less competitive in the world market and shrinking demand for their products.

On the other hand, expanded insurance and health care for farmworkers could improve productivity, protect against public health risks and limit total medical costs by reducing emergency room visits and hospitalizations.

While the farm industry opposed the legislation based on ideological objections to government mandates and fears of higher costs, now that it's passed some growers and their trade groups -- along with advocates for farmworkers -- see potential benefits.

For instance, starting this year, employers with fewer than 25 workers are eligible for federal tax credits for six years to offset the expense of providing insurance, if they pay at least half the cost. That could provide an incentive for smaller farmers to start offering coverage, said Mike Gempler, executive director of the Washington Growers League in Yakima.

In addition, the new state insurance exchanges -- through which individuals and employers with fewer than 100 workers will be able to shop for coverage starting in 2014 -- could offer farmers a wider choice of quality plans for themselves and their workers, said Jeff Stone, government relations director for the Oregon Association of Nurseries. That could be a boon to nurseries, the state's largest agricultural sector. Nurseries generally have full-time, year-round workers and tend to offer health coverage.

Workers’ ranks

Oregon has an estimated 174,000 migrant and seasonal farmworkers and dependents; in Washington, the estimated total is 289,000. There are no data on the number of full-time, year-round agricultural workers, such as packinghouse employees. Nationally, migrant and seasonal workers typically earn from $7,500 to $11,500 a year, according to Alberto Moreno, Oregon's migrant health coordinator. But full-time packinghouse workers can make $25,000 to $30,000.

For those farmworkers and their family members who don't receive employer coverage under the new law, more will be eligible for Medicaid, which will cover individuals and families up to 133 percent of the poverty level -- $28,327 for a family of four -- starting in 2014. That's only for workers and family members who have been in the U.S. legally for more than five years. Undocumented workers and those in the country legally for less than five years still won't qualify.

Farmworkers and their families who are legal residents and earn more than the Medicaid threshold but less than $88,000 a year will qualify to buy subsidized insurance through state basic health plans or the exchanges. Given their generally low incomes, the law also would sharply limit their out-of-pocket medical costs. Starting in 2014, the law will require farmworkers and other individuals without employer coverage to obtain insurance or pay a tax penalty.

Even so, experts say it will be a challenge to get farmworkers, who generally suffer poorer health and have less access to health care than other Americans, to sign up for either employer or individual health plans because of their low incomes. Peter Verbrugge, a large fruit grower and packinghouse operator in Yakima who pays 80 percent of his full-time employees' health premiums, said only about half his workers take the coverage.

"If their annual income is $7,500, there's certainly no reason to think they could afford to buy into the health care benefit," Moreno said.

That's why Moreno and other experts think farmworkers and their families will benefit more from the new law's $10 billion national funding expansion for federally qualified clinics such as La Clinica del Carino Family Health Center and the Yakima Valley Farm Workers Clinic. These clinics already provide health care for many farmworkers in Oregon and Washington, including those who are undocumented.

"Farmworkers will have access to better capitalized safety-net clinics," said Dr. Tina Castanares, who helped found La Clinica and practices there.

She touted the law's many provisions to strengthen public health programs and increase the number of physicians and health professionals serving the poor. "Add to that farmworkers who may get insurance coverage, which will help them reach specialists and services they may not have been eligible for otherwise."

Biggest concern

For agricultural employers, though, the biggest concern is whether they'll be required to cover seasonal workers, whom Pacific Northwest growers depend on heavily for their labor-intensive fruit and vegetable crops. The law excludes seasonals -- defined as working 120 days or fewer in a calendar year -- from being counted toward the threshold of 50 full-time-equivalent employees that brings employers under the insurance mandate. But a new Congressional Research Service analysis says the law requires employers over that threshold to cover seasonals during the months they are working full-time or pay the penalty.

Gail Greenman, national affairs specialist for the Oregon Farm Bureau, said her group will lobby for rules that don't require such coverage. "You may only need seasonal workers for three to six weeks. How do you realistically cover them?" she asked. "By the time the paperwork has come through, they're gone."

Farm owners also are unhappy about the new law's provision for higher personal taxes on wealthier Americans to pay for expanded coverage, such as the increased Medicare payroll tax. Many farm operations, even larger ones, are organized as S corporations, meaning the corporate taxes are paid personally by the stockholders. The higher taxes will hurt farm employers' bottom lines, Stone, of the Oregon Association of Nurseries, cautioned.

Given these added costs, some observers predict agricultural employers, particularly those not providing employee health coverage, will reorganize or change their employment policies to sidestep the new insurance requirement. There's also concern about retaliation against farmworkers who buy subsidized coverage through the state insurance exchanges and trigger a penalty on the employer.

"I have to think people will figure out how to have less than 50 employees and avoid it if they're not providing coverage," Verbrugge, the fruit grower, said. 

It's also uncertain whether companies providing temporary farm laborers to growers will be required to offer health coverage to those workers or pay the penalty. The congressional analysis says they would if the temporary agency actually employs the workers.

Such labor-contracting firms, however, are much less common in the Pacific Northwest than in California. No growers in Hood River or Wasco counties use labor contractors, said Jean Godfrey, executive director of the Columbia Gorge Fruit Growers trade group.

Still, Bailey, The Dalles farmer, believes that health reform was badly needed and that providing coverage for workers is good for business. "We look at it as getting better, more productive workers who stick around," he said. "But for many farmers who haven't provided coverage, it will be a new cost."