A recent report highlights risks to consumers and the insurance market posed by health care sharing ministries (HCSMs), religious organizations (mostly Christian) which cover members’ healthcare costs through contributions from other members. HCSMs are exempt from virtually all regulation, do not guarantee payment, and offer extremely limited coverage. Because their features closely resemble traditional insurance products, they may confuse consumers into thinking they are buying conventional health insurance. And because HCSMs operate outside the purview of insurance regulators, lack of data hampers assessment of their impact on consumers and the health insurance market.
“Health Care Sharing Ministries: What Are the Risks to Consumers and Insurance Markets”, was authored by health policy experts from Georgetown University and funded by The Commonwealth Fund, a charitable organization which describes itself as supporting a “high-performing health care system that achieves better access, improved quality, and greater efficiency, particularly for society’s most vulnerable”. The authors analyzed laws governing HCSMs in all states, interviewed officials in 13 states, and reviewed membership requirements and benefits of five HCSMs.
HCSMs resemble health insurance, so consumers may think they are purchasing health insurance, when, in fact, they are not. The most striking difference between HCSMs and health insurance is the lack of guaranteed payment, even when a member’s health care expenses are included under the HCSM’s benefits package. And, as we shall see, members may have little recourse against their HCSMs if they are stuck with the bill.
In a typical health care sharing ministry, according to the authors, members contribute periodically (usually monthly) to cover the medical expenses of other members. HCSMs either match paying members with other members who need funding for health care costs or pay covered medical expenses directly from the pool of contributions. Most have features that mimic traditional insurance, such as payments resembling deductibles, monthly premiums, co-payments, a defined benefits package, use of provider networks, and levels of coverage similar in name to policies governed by the Affordable Care Act (e.g., gold, silver and bronze plans). HCSMs are sold by brokers, who are paid commissions, just like traditional health insurance.
Yet, because they don’t meet the Affordable Care Act’s (ACA) definition of “insurance”, HCSMs are not subject to the consumer protection provisions of the ACA. And although some courts have declared that HCSMs legally constitute the business of insurance, no state currently regulates HCSMs as insurers, exempting them from the laws governing conventional health insurance companies. Thirty states have enacted “safe harbor” rules that specifically exempt HCSMs from insurance regulation if they comply with minimal reporting requirements. In contrast, state insurance laws typically protect health insurance policy holders through, for example, minimum capital and surplus requirements (to ensure claims are paid), examinations, financial statement reporting requirements, and complaint procedures.
Because HCSMs are not subject to the ACA’s consumer protection provisions, major differences exist between ACA-compliant conventional health insurance and an HCSM that could profoundly impact members’ health and finances. Coverage for pre-existing conditions, required by the ACA, may be limited or excluded altogether. The report’s authors note that most HCSMs will share costs for pre-existing conditions only if the condition was cured and year or more has passed without symptoms or treatment. For example, a Samaritan Ministries member’s heart condition would not be eligible unless symptom- and treatment-free for five years. While the ACA bans charging higher rates based on health status, HCSMs do not and some refuse membership to those who cannot pass a medical exam. Nor do HCSMs have to cover the ACA’s essential benefits, such as preventive care, like vaccines, or prescription drugs, and most either do not provide this coverage or have significant limitations. HCSMs do not have to comply with the ACA’s dollar caps on health care services or out-of-pocket expenses either.
My own review of the report’s “Key Features of Health Care Sharing Ministries” revealed that religious belief appears to outweigh good medical care in some instances. For example, maternity services are eligible for cost sharing under Altrua Ministries coverage only if the woman is married. Medi-Share Christian Care Ministry excludes “non-Biblical lifestyles and choices” such as alcohol and drug-related injuries and out-of-wedlock maternity. Most HCSMs excluded mental health expenses, such as psychiatric care, and one excluded conditions caused by weight gain.
Examples of HCSMs refusing to pay medical expenses have been reported in the media. One organization, Christian Healthcare Ministries, went into receivership with $34 million in unpaid claims and a $14 million judgment was entered against two of its officials for fraud and breach of fiduciary duties.
HCSMs were originally created as an option for religious communities that objected to traditional insurance. Since the ACA passed, however, HCSMs are being marketed more broadly, including to employers for employee coverage, and sold by insurance agents. Although the lack of state oversight means enrollment figures are hard to come by, estimates are that HCSM membership has grown from fewer than 200,000 to one million since enactment of the ACA. States reported that there was an increase in marketing of HCSMs during open-enrollment periods, along with a concomitant increase in calls from consumers, mostly from those who incorrectly believed they had purchased health insurance.
Most [officials] expressed concern that some [HCSMs] appeared to be functioning in ways that differed from their original intent. Nearly all respondents who noted such concerns said that many HCSMS use features that are very similar to insurance and may therefore mislead consumers into thinking they are enrolling in coverage that guarantees payment for a covered claim.
Of the 30 states that exempt HCSMs from the laws regulating insurance, five don’t even require written disclaimer that the organization is not an insurance company. Only six require an annual audit. This lack of regulation has left state officials in the dark: None of the officials from 13 states interviewed for this report could say for sure which HCSMs were active in their state or how many individuals were enrolled. Because they have no legal mechanism for getting information from these organizations, some officials resorted to reading local news reports or HCSM newsletters to gather more information.
Unlike health insurers subject to state insurance laws, there is no specific legal mechanism for acting on consumer complaints either. One official noted that the state couldn’t act on consumer complaints of unpaid claims unless there was evidence of actual fraud.
Another concern: drawing healthy individuals from the ACA-regulated market, potentially affecting the individual market risk pool. Some regulators suspect that HCSMs are drawing people priced out of the ACA marketplace coverage because they don’t qualify for premium subsidies. While HCSMs do have lower up-front costs, consumers may not understand what they are buying and be in for a nasty surprise when payment is not forthcoming for an expensive medical procedure even though it is eligible under the HCSM’s plan.
Yet there is legislative hostility to regulation of HCSMs:
Regulators in one state had begun taking action against an HCSM for doing business without obtaining a license, but the legislature responded by passing a safe harbor. Another respondent said that legislation to strengthen their safe harbor’s notice requirement had been defeated, making regulators doubtful they could obtain even modest protections for consumers. Following regulatory scrutiny of an HCSM’s operations, a third state’s legislature expanded the definition of HCSMs exempt from state regulation, making the HCSM’s operations legal under the revised safe harbor definition.
The health policy experts who authored the report suggest that, at a minimum, all states, regardless of whether they have a safe harbor for HCSMs, should collect data; for example, obtaining membership numbers through required audits and monitoring the use of brokers. That, at least, would allow states to better understand the role HCSMs are currently playing in the insurance market.
In my view, this legislative pampering of HCSMs is of a piece with the broader effort by Republicans to undermine the Affordable Care Act (along with “skinny” plans, association plans, and the repeal of the individual mandate), perhaps with a dose of deference to religious ideology thrown in for good measure. Of course, the larger problem is that the U.S. continues to resist sane solutions to health care coverage that other first-world nations figured out long ago. The result is, according to the National Association of State Legislatures:
When compared to other countries—Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland and the United Kingdom—the United States ranks last or near the bottom on measures related to health indicators, such as access, efficiency and equity.
In those countries, the idea that health care sharing ministries are a viable option for paying healthcare costs would be greeted with the disdain the idea deserves. In the U.S., we not only consider HCSMs a reasonable alternative to health insurance, we protect them from effective regulation.
