Urban-rural differences in employer-based health insurance coverage of workers.

Prior research indicates that rural workers are less likely to obtain health insurance coverage through their employer, however, the reasons for this rural-urban differential in coverage rates are not well understood. Differences in coverage may stem from differences in the proportion of workers offered the chance to participate in an employer plan or to differences in the proportion of workers who enroll in an offered plan. Knowing whether rural firms and employees are fundamentally different than their urban counterparts is important to guide policy interventions aimed at increasing access to health insurance coverage. Insurance Survey to measure differences in the proportion of rural and urban workers who are offered insurance coverage through their employer and in their rates of participation in offered plans, and to assess the effects of firm size, wages, and other factors in explaining the residential differences. Study findings confirm the results of prior research indicating that the probability of a rural worker being covered by an employer-sponsored plan is lower than of an urban worker. This difference is the product of a 10 percent difference in the probability of an employee being offered coverage and a 4 percent difference in the probability of a worker enrolling, if offered a plan. The shortfall in the probability of employer-based coverage is eliminated, however, when we adjust rural firm size and wages to urban levels, indicating that the smaller average firm size and lower wages found in rural areas are primarily responsible for the observed differential. The good news is that these findings indicate that rural workers or employers do not face coverage barriers unique to rural areas and possibly driven by factors such as informational barriers, distinct business cultures, or delivery system differences in the availability of free care. Such findings might have suggested the need for policy interventions specific to rural environments. It appears that policy solutions fitting urban America are likely to work in rural America as well. In particular, policies that target the special problems and barriers that small firms and their employees face in obtaining and affording health insurance—including small group reform, health insurance purchasing cooperatives, and tax credit or subsidy programs—are especially relevant to rural firms and workers. The bad news is that, in addition to the lower coverage rates among rural workers, the factors affecting these low coverage rates—firm size and wage levels—are not easily amenable to policy solution. To date, policy …