NEW YORK (Reuters Health) - Americans who live in rural states or work for small businesses get less bang for their buck when it comes to health insurance, new research shows.

In a first state-by-state look at the "generosity" of employer-based health insurance, researchers found that people in largely rural states often paid more for the benefits they got than their urban-area counterparts did.

The researchers gauged insurance plans' generosity by calculating their actuarial value - the percentage of an employee's medical expenses that the plan covers.

When average premiums were adjusted for actuarial value, people in states such as Maine, West Virginia, Wisconsin and Wyoming got the least value for their money, according to findings published in the journal Health Affairs.

In contrast, residents of states with large urban populations, including California, New York, Massachusetts and Pennsylvania, tended to get more service for their dollar.

Similarly, the study found, people employed by the smallest businesses paid an average of 18 percent more than workers at large corporations, when their insurance premiums were adjusted for generosity.

This latter finding may not be surprising, as large employers have much greater leverage to negotiate with insurers.

But the findings "put actual numbers on the conventional wisdom" that small-business employees end up with less generous health insurance, said lead study author Jon Gabel, vice president of the Center for Studying Health System Change, a non-partisan policy research organization in Washington, D.C.

Among these numbers was the fact that more than half of workers at the smallest businesses - those with fewer than 50 employees - had to pay a deductible before their coverage kicked in, versus 40 percent of workers at firms that employed more than 1,000 people.

And when workers at large companies did pay a deductible, it was lower: $386, on average, versus $599 for small-business employees.

But the surprising finding, Gabel told Reuters Health, is that insurance premiums in rural states, when adjusted for the generosity of coverage, were higher. "We generally think of health costs as being lower in rural states," he noted.

Yet, the study found, the average adjusted premium for California employees was roughly $2,800, whereas that figure in Wyoming was $4,000. It was employees in Massachusetts who got the most for their premium dollar - with 88 percent of their medical expenses covered - while workers in Iowa, Mississippi and Montana got the least value for their money.

According to Gabel, the major reason for the lesser generosity in rural states is that traditional indemnity, or "fee-for-service," plans often have a strong presence there. Overall, the study found, the average adjusted premium for indemnity plans was about 25 percent higher compared with health maintenance organizations (HMOs).

This finding, Gabel said, highlights the fact that the often-criticized, cost-cutting HMO plans have some "very good" aspects -- in this case, offering employees more coverage for their premium dollar.

Gabel and his colleagues based their findings on data from several national surveys, including a 2002 federal government survey of roughly 30,000 U.S. business sites.

SOURCE: Health Affairs, May/June 2006.

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By Amy Norton

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