Publications » Newsletter

Email You can now receive our news and information via e-mail. To sign up for email delivery of our news, click here.
Newsletter Archive Newsletter Archive

May/June 2007

Inside This Issue:


Increase deductibles and employee contributions, decrease coverage
Research Details Small Business Response to the Rising Costs of Health Insurance
The effects of our country’s rapidly escalating health insurance costs are resonating across the economy, and small businesses have been feeling the tremors. As a major source of health insurance coverage for many employees throughout the state and nation, businesses, both large and small, are taking steps to contain costs so that they may remain competitive in today’s economy.

Research sponsored by the Center for Rural Pennsylvania has shown that small businesses in Pennsylvania are dealing with escalating costs in a variety of ways, including increasing deductibles, co-pays and employee contributions, and decreasing coverage. Many businesses are also shopping for plans every year trying to find cheaper alternative providers. More dramatic steps to curb costs involve eliminating coverage of dependents, or, in some cases, completely eliminating health insurance benefits. As a result, working Pennsylvanians are paying more for their health insurance, or losing some or all of their coverage.

Differences in coverage
While other research has shown that businesses in rural areas are less likely to offer health insurance benefits and tend to provide less access to healthcare insurance benefits than businesses in urban areas throughout most of the U.S., few studies have examined the effect of business size on health insurance coverage in rural and urban areas.

To determine the number and types of health insurance benefits offered by small businesses and to evaluate the health insurance plans available to them, Dr. Martin Shields, Lisa Davis, M.H.A., Jennifer Hessert, M.Ed., Jennifer Halvorson, and Jessica Sheer of Pennsylvania State University, compared rural and urban small businesses, which were defined as those that employ less than 50 workers, and the insurance benefits, if any, offered by them to their employees.

In 2005, the researchers conducted a telephone survey of 713 small businesses in Pennsylvania to understand the differences between small businesses in rural and urban counties; and the differences between small small (five to 10 employees), medium small (11 to 25 employees), and large small (26 to 50 employees) businesses. 

Overall, the research has shown that small businesses with more employees and those that pay higher wages are most likely to provide health insurance benefits to full-time employees and their dependents. The research findings also show that as the percentage of unskilled workers increases, businesses are less likely to provide health insurance benefits to full-time workers and their dependents.

According to the research results, more than 40 percent of the respondents that offer health insurance benefits have seen their costs of providing healthcare increase by an average of 10 to 20 percent per year over the past five years. About 35 percent reported annual cost increases of more than 20 percent per year during the last five-year period.

The likelihood that businesses provided employee health insurance also varied substantially by industry, as 97 percent of manufacturers, 96 percent of professional, scientific and technical services and 96 percent of wholesale trade small businesses provided health insurance to employees. The industries least likely to provide health insurance to employees were accommodation and food services, at 55 percent, and administrative and support, and waste management and remediation, both at 52 percent.

Overall, health insurance benefits seem to be quite important in a company’s ability to attract and retain employees. The results show that 64 percent of all urban small businesses and 60 percent of all rural small businesses think insurance benefits are as important as wages.

Both rural and urban businesses overwhelming agreed that health insurance packages are important in attracting and retaining a qualified workforce (83 percent of urban and almost 81 percent of rural businesses). Ten percent of rural and 11 percent of urban businesses disagreed that health insurance packages are important to attract and retain qualified workers.

Complex issue
What also emerged from the research was the enormity and complexity of the issue, one that is compounded by the interests and needs of various stakeholders, including healthcare providers, insurance companies, pharmaceutical and medical supply companies, businesses (both small and large, rural and urban), policy makers, and others.

The researchers offered policy considerations that may help to alleviate the challenges that small businesses face in offering health insurance benefits to employees. The considerations are to: establish a quasi-governmental independent non-profit agency to act as an unbiased broker of insurance benefit plans designed specifically for small employers; provide funds and incentives for the state’s small employers, both rural and urban, to form cooperatives to provide purchasing power for small business health insurance; and consider putting a stronger focus on programs and policies that target the establishment of large small businesses throughout the state since large small employers, regardless of geographic location, are the most likely to offer business-sponsored health insurance.

Full report available
For a copy of the full report, A Rural-Urban Analysis and Comparison of Health Insurance Benefits Offered by Small Businesses, call the Center for Rural Pennsylvania at (717) 787-9555, email or visit


The Relationship Between Rural Communities and Prisons
Not everyone would welcome a prison to their community. But for some rural Pennsylvania communities, prisons can be particularly enticing; especially in communities that are struggling economically.

But like many other businesses, prisons may impact communities in ways that residents never considered. 

In 2005-2006, the Center for Rural Pennsylvania sponsored research that measured the perception of the economic impact of, and community satisfaction with, correctional facilities located within selected rural communities in Pennsylvania.

Drs. Kevin E. Courtright, Michael J. Hannan and Susan H. Packard, and Edward T. Brennan of Edinboro University of Pennsylvania examined the relationship between rural communities and State Correctional Institutions (SCIs) in four rural communities.

Prisons, communities studied
The four SCIs and their respective communities studied were SCIs Albion, Cambridge Springs, Dallas and Houtzdale. The prisons were selected because they represent different geographic areas within the state and had been operating for a time sufficient to assess prison-community relations.

Data were collected using a mail survey of local community residents,  focus group interviews with selected local government leaders and representatives of local community agencies, and interviews with prison management. 

Prison-community relationship
Several issues seemed to impact the prison-community relationship, including the prison siting process, the infrastructure in the community, and communication between the prison and the community.

Corrections administrators at all four sites recognized how the siting process impacted the long-term relationship between the prison and the community.

According to the administrators, crime and safety were major concerns at the time of siting for residents of at least two of the communities with recently constructed prisons. After the siting was completed, residents expressed little concern for safety and moderate concern regarding ex-offenders and parolees living in their communities.

With one exception, community focus group participants expressed dissatisfaction regarding the perceived lack of communication by the Department of Corrections (DOC) with local communities. Participants felt that DOC did not seek input from community members and did not provide an opportunity for formal communication during the siting process.

Focus group members believed that much information was spread informally (rumor), which led to increased fear and uncertainty about the new prison.

After the prisons were sited, several administrators and community members noted either past or on-going water and/or sewer issues making infrastructure a cause of tension between the prison and the community.
Effects on the local economy
On a positive note, the participants perceived that the prison would be good for the local economy. According to the four groups of administrators, the most important economic impact on their local communities was job creation. The perception that the prison would provide the local community with a needed economic boost was also supported by the expectation of new “spin-off” businesses moving into the area as a result of the prison’s presence.

The four community focus groups also agreed that the prisons had generated employment opportunities. However, they also expressed concern that many of the prison employees did not reside near the prisons and that jobs were not always made available to local residents, or that those offered to locals were lower-paying jobs.

Improving the prison-community relationship
The research results revealed areas for possible improvement in prison-community relations across many areas including the prison siting methods, on-going communication between prisons and communities, public services and infrastructure support, improved employee interactions in the host communities, purchasing and procurement policies that would allow prison administrators to make more purchases in the local community, and hiring more local community members.

The researchers also offered specific policy considerations that may improve the siting process and the relationship between prisons and communities, including the following:

Full report available
For a copy of the full report, Prisons and Rural Communities: Exploring Impact and Community Satisfaction, call the Center for Rural Pennsylvania at (717) 787-9555, email or visit


Chairman’s Message
Business growth and job creation rank high on my priorities list as a legislator. They are essential to the economic vitality of Pennsylvania and help support a quality of life we all desire. When the Senate is not in session, I regularly visit businesses in my district to obtain, firsthand, the information I need that helps me develop and support good public policy. A concern that continues to be raised by the businessmen and women I meet with is the increasing costs of employer-sponsored healthcare. Many of them report double-digit percent rate increases in the last few years. These are employers who want to continue offering the benefits that attract and retain good employees. Yet, to remain competitive, they must find ways to control their operating costs.  

The issues are complex and there doesn’t appear to be a “one-size-fits-all” solution.  Concerns, by the various parties affected, are being raised not only in Pennsylvania, but at the national level as well.

To help those at the state level understand one aspect of this complicated issue, the Center for Rural Pennsylvania sponsored research to determine how Pennsylvania’s small businesses are responding to the rising costs of providing employee healthcare coverage.  The results have been published and are highlighted in this edition of Rural Perspectives.

Former Penn State University professor Dr. Martin Shields, along with staff of the Pennsylvania Office of Rural Health, conducted the research in 2005. Their work included surveying more than 700 small businesses throughout Pennsylvania. The team also interviewed representatives from the health insurance industry, state government and professional associations.

For this research project, small businesses were defined as those that employed 50 persons or less. The results revealed that 40 percent of the respondents that offer health insurance benefits have seen their costs of providing healthcare increase by an average of 10 to 20 percent per year over the past five years. About 35 percent reported annual cost increases of more than 20 percent per year during the last five-year period.

Small businesses also tended to change the type and/or amount of health insurance coverage provided. About 46 percent switched plans to reduce employer costs. Other frequent changes made to health coverage included increasing employee deductibles, reducing the amount of coverage, increasing co-pays for benefits, and increasing employee contributions. While these options do provide cost savings to businesses, they can cause a business to incur costs, too, since businesses have to spend time to research new options. The research points out that, in addition to the financial and coverage changes that occur when an employer switches plans, those covered under the plan may have to change healthcare providers or realize reduced coverage.

Small business is an important part of the Pennsylvania economic landscape – both rural and urban. Almost 94 percent of all businesses in the commonwealth employ 50 or fewer workers. Their insight into the challenges of providing employee healthcare coverage is one that is needed on this important issue.

The Center for Rural Pennsylvania is pleased to provide this research report to the General Assembly and others engaged in developing policy options for the commonwealth so that we can continue to tackle these complex issues.

Senator John Gordner


Census Data Reveal Small Increase in the Number of Rural Small Businesses Statewide
Small businesses are the economic engine of Pennsylvania’s rural economy. According to the most recent data from the U.S. Census Bureau, in 2004, 95 percent of all rural business establishments had less than 50 employees. 

Between 2000 and 2004, there was a 2 percent increase in rural small businesses, while larger businesses, those with 50 or more employees, declined 1 percent. In urban areas, the number of small businesses during this period also increased 2.5 percent, and large businesses increased 1 percent.

Nationwide, there was a 5 percent increase in small businesses, with the largest increases occurring in Idaho, Florida, Utah and Nevada, each with an increase of more than 10 percent. Among the 50 states, Pennsylvania ranked 37th in the change in the number of small businesses. 

The fastest growing rural small businesses were those in the health care, professional and technical services, and transportation and warehousing sectors. From 2000 to 2004, each of these sectors had an increase of more than 200 new businesses. The sectors that saw the largest decline during this period were wholesale trades and retail trades. Both of these sectors lost more than 130 establishments during this period.


A Closer Look: Rural Households and the Food Stamp Program
Since the late 1970s, the federal Food Stamp Program (FSP) has provided a safety net against hunger for millions of low-income Americans. This year, Congress is considering the reauthorization of FSP as part of the 2007 federal Farm Bill. To understand rural Pennsylvanians’ experience with this program, the Center for Rural Pennsylvania analyzed data from the U.S. Department of Agriculture (USDA), the Pennsylvania Department of Public Welfare (DPW), and the RuralPA-CPS, the Center’s yearly population survey*.

Rural/urban FSP participation
Data from DPW indicated that, over the 12-month period of 2006, an average of 293,500 rural Pennsylvanians, or 9 percent of the rural population, received Food Stamps. This rural participation rate was identical to both the urban Pennsylvania rate and the national rate.

Within Pennsylvania, the northwest region had the highest participation rate of 12 percent and the northeast had the lowest participation rate of 8 percent.

Data from USDA show that, nationally, Kentucky, Tennessee, West Virginia, Mississippi and Louisiana had the highest participation rates of about 14 percent each.

DPW data show that the average number of rural Pennsylvanians receiving Food Stamps increased by 10,200, or nearly 4 percent, from the 12-month period of 2005 to the 12-month period of 2006. In urban areas, there was a 5 percent increase in participation, and nationally, there was a 4 percent increase.

Within Pennsylvania, the counties with the largest increases were Northumberland, Cumberland and York. Each of these counties saw an increase of 13 percent or more.

USDA data indicate that Massachusetts and Mississippi had the largest increases nationwide of more than 17 percent each.

Rural/urban household demographics
According to data from the 2006 RuralPA-CPS, the typical rural household receiving Food Stamps had 3.5 members, of which 37 percent were under 18 years old and 5 percent were over 65 years old. Thirty percent of rural households receiving Food Stamps were comprised of a single person, while 27 percent were headed by a single parent. About 88 percent of rural FSP householders were white, non-Hispanic, and 76 percent had a high school diploma or some postsecondary education. 

While the typical urban FSP household also had 3.5 persons, there were differences in age distribution: 32 percent were under 18 years old and 8 percent were over 65. Twenty seven percent of urban households receiving Food Stamps were comprised of a single person and 27 percent were headed by a single parent. About 53 percent of these urban householders were white, non-Hispanic, and 72 percent had a high school diploma or some postsecondary education.

The 2006 RuralPA-CPS found that among rural FPS households, 48 percent owned their own home and 52 percent rented. Seventy-six percent of rural FSP households had incomes under $20,000, and more than 72 percent were in poverty. Forty percent of the rural FSP householders were employed, while 11 percent were unemployed. The remaining 49 percent of householders were disabled, retired or not looking for work.

Regarding health care insurance, 42 percent of the households were insured through government programs, such as Medical Assistance, 33 percent received Medicare, 3 percent were insured through their employer, 8 percent did not have health care insurance and 14 percent had a combination of the above or purchased their own coverage.

Among urban FSP households, 28 percent were homeowners and 72 percent were renters. Urban incomes were slightly higher than their rural counterparts as 58 percent reported having incomes under $20,000, and 55 percent were in poverty. Forty-two percent of the urban FSP householders were employed, 5 percent were unemployed, and 53 percent were disabled, retired or not looking for work.

For health insurance coverage, 17 percent were insured through government programs, 52 percent were insured through Medicare, 2 percent were insured through their employer, 10 percent had no heath insurance and 19 percent had a combination of the above or purchased their own coverage.

Other income support programs
Both rural and urban FSP households were more likely to rely on other income support programs than non-FSP households. In 2006, 33 percent of rural FSP households and 23 percent of urban households received Supplemental Security Income, or SSI, payments. Among non-FSP households, less than 4 percent of rural and urban households each received SSI payments. In addition, 7 percent of the FSP rural households and 19 percent of the urban FSP households received Temporary Assistance for Needy Families payments, compared to less than 1 percent of non-FSP rural and urban households. 

Food Stamp Program Eligibility Criteria
A household may receive Food Stamps if it meets certain household income requirements and if the value of any household assets, such as property or vehicles, does not exceed certain limits. As of October 2006, a family of three had to have a monthly gross income of less than $1,799 to receive Food Stamps and have less than $2,000 in countable resources, or $3,000 in countable resources if at least one member of the household was 60 years old or older or was permanently disabled. Applicants must also reside in Pennsylvania in the county where they are applying and must meet certain work requirements.

* All data are from the 2006 RuralPA-CPS unless noted otherwise. The RuralPA-CPS, modeled after the March Supplement of the federal Current Population Survey, was first conducted in 2005 by the Center for Rural Pennsylvania. The RuralPA-CPS provides baseline data on the state’s rural households and individuals. In 2006, the Center expanded the survey of more than 2,000 rural households to include 1,000 urban households and their members.


Rural Recycling Rates Increase
In 1994, the Pennsylvania Department of Environmental Resources, which is now the Department of Environmental Protection (DEP), reported that rural Pennsylvanians recycled 12 percent of the 2 million tons of waste they produced. A decade later in 2003, rural Pennsylvania recycled 26  percent of the nearly 3 million tons of waste they produced: in terms of total tonnage recycled, that’s a 195 percent increase.

In 2003, rural residents recycled an average of 1.2 pounds of materials per person per day. In urban areas the average was 2.0 pounds of materials per person per day. Nationally, in 2003, the federal Environmental Protection Agency estimated that the recycling rate was 1.4 pounds of materials per person per day.

To assist in the recycling effort, many communities have established recycling drop-off locations. According to DEP, there are more than 3,900 drop-off locations statewide: 38 percent of these locations are in rural areas and 62 percent are in urban areas. On a per capita basis, however, rural areas have 43 locations per 100,000 residents, while urban areas have 27 per 100,000 residents.

In rural areas, there was a statistically significant correlation between recycling rates and recycling drop-off locations.  The more locations there are per capita, the higher the per capita recycling rate.


Did You Know . . .



Fast Fact: Hunting and Fishing Licenses Sold in Pennsylvania, 1998 to 2005

Just the Facts: Rural America Population Estimates
According to the latest Census Bureau estimates, rural Pennsylvania had a 1.4 percent population gain from 2000 to 2006. This increase was fueled solely by inmigration, since the number of deaths in rural Pennsylvania exceeded the number of births. In the state’s urban areas, there was a 1.3 percent population increase from 2000 to 2006. This increase was attributed to a higher birth rate and international inmigration. 

But what about the rest of rural America? According to Census estimates, from 2000 to 2006, rural counties in the U.S. had a 6 percent population increase, which was attributed to domestic migration, as 2.3 million persons moved from urban areas to rural areas. Despite this population movement, the nation’s urban areas also gained population. From 2000 to 2006, urban areas had a 6.5 percent population increase, which was attributed to a higher birth rate and international inmigration.

Across the U.S., there were vast differences in rural population changes. For example, the rural areas of the Mid-West had the slowest population gain of less than 2 percent, while the rural areas of the West had the largest increase of 13 percent. Rural areas in the Northeast had a growth rate of 3 percent.

At the state level, 10 states had a rural population loss from 2000 to 2006. The states with the largest declines in rural population were Kansas, Nebraska and North Dakota, each with a decline of more than 3 percent. The states with the largest rural population increases were Arizona, Florida and Nevada, each with an increase of more than 16 percent. Among the 50 states, Pennsylvania rural areas ranked 34th in population gain. 

At the county level, 45 percent of the 2,351 rural counties in the U.S. had a population loss from 2000 to 2006. On average, these counties had a 3 percent population loss, which was attributed to residents moving out. The number of deaths in these counties also outpaced the number of births. This population decline, however, is not new, as these counties had experienced a 6 percent decline in population from 1980 to 2006. In Pennsylvania, 30 of the commonwealth’s 48 rural counties lost an average of 2 percent of their population during this period. 

Fifty-five percent of rural counties in the U.S. gained population, typically about 9 percent, from 2000 to 2006, mostly from domestic migration and higher birth rates. Between 1980 and 2006, these counties saw a 44 percent increase in population. Within Pennsylvania, 18 rural counties had a population increase of about 7 percent, on average, from 2000 to 2006.

Rural and Urban Counties with Population Loss, 2000 to 2006