NCPA - National Center for Policy Analysis


February 6, 2006

Farm families have a new option for covering their medical bills -- let agribusiness giant Cargill help pay them, says Steve Karnowski of the Miami Herald.

Harvest Health -- Cargill's new program -- will give farm families a new way to control their rising health care costs, while the company benefits by getting a more predictable supply of grain, says Karnowski.

Under the program:

  • Participants will sign-up for tax-exempt health savings accounts (HSAs) through Wells Fargo and for high-deductible health plans (HDHPs) through a Cargill online partnership or their local insurance agent.
  • A qualifying HDHP might have a $2,500 deductible for a family policy, but a customer can choose one with a higher deductible and lower premiums, or vice versa.

The program's main mechanism is a futures market, which allows farmers to decide how much money they want Cargill to put into their HSAs, says Karnowski. For example:

  • A farmer might contract to sell Cargill 11,000 bushels of corn for fall delivery at a maximum target price of $2.06 a bushel; they will receive $28,600 for the grain at harvest -- but Cargill will put $1,000 into the farmer's HAS within five to 10 business days.
  • The farmer then has two choices: use that money to pay health care expenses that fall under his insurance policy's deductible, or let it build and earn interest to cover future medical bills.
  • Cargill will contribute up to the legal maximum of $5,450 for a family and $2,700 for individuals, though it will cap the amount of grain for which it will contract at 25 percent of a farmer's total crop.

Moreover, Harvest Health gives farmers an incentive to deliver their grain to Cargill instead of competitors and it carries a low premium, says Karnowski.

Source: Steve Karnowski, "Cargill offers health plan to farmers," Miami Herald, January 20, 2006.


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