The Health-Sharing Duck

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Health care sharing ministries seem similar to traditional health insurance, but they evade the scrutiny of federal and state regulators.

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As the saying goes, if a bird looks like a duck, swims like a duck, and quacks like a duck, it is probably a duck. But this appears not to be the case for health care sharing ministries, organizations whose members currently number over 1 million Americans. These members pay monthly fees to spread the risk of incurring medical costs—just like insurance companies do. Yet health sharing organizations are not actually treated under the law like insurance companies.

Instead, health care sharing ministries have been described as a “cross between a GoFundMe, a mutual aid society, and a lending circle.” Their members usually share religious or moral beliefs, and the vast majority of them are affiliated with Christian religious groups. Some Christian-led health care sharing ministries require members to demonstrate their commitment to a religious lifestyle by, for example, submitting a verification form signed by a church leader or signing a pledge to limit alcohol consumption.

Despite functioning much like insurance companies, qualifying health care sharing ministries receive a religious exemption and are thus not considered “insurance” under the federal Patient Protection and Affordable Care Act (ACA). This means they are not subject to requirements such as covering preexisting conditions or mental health services. Furthermore, as 30 states have laws on the books that exempt health care sharing ministries from state insurance codes, many of these organizations are not even subject to the basic obligation to pay claims.

The lack of meaningful regulation of health care sharing ministries sometimes means that when members get sick and incur even modest medical costs, they can still find themselves confronted by collectors for medical bills that have never been paid.

According to the now-defunct Alliance for Health Care Sharing Ministries, when the ACA went into effect in 2014, 160,000 people were members of health care sharing ministries. With membership now numbering over 1 million, some experts argue that exempting members from the ACA’s individual insurance mandate has helped drive the growth.

Health care sharing ministries could be attractive to those families who do not have employer-sponsored insurance and do not qualify for subsidies to purchase insurance on the ACA’s state-based exchanges. For example, a young family of four can purchase a standard plan with Samaritan Ministries for $530 per month with a $300 “unshared” amount, which functions like a deductible. Contrast that with the options for health coverage on the state exchanges, where middle-class families can expect to pay higher premiums and have deductibles upwards of $10,000.

Some households see health care sharing ministries not merely as a less expensive way to cover their risk of medical expenses, but they may also prefer the often-religious set of beliefs by which such health care sharing plans operate. Some members describe positive experiences with their ministry, reporting on-time payments of claims worth tens of thousands of dollars. But other households report struggles to get ministries to pay for modest services like flu shots and routine medical tests.

As membership in health care sharing ministries continues to rise, so too might the prices for health insurance on the ACA exchanges. As health care sharing ministries do not cover pre-existing conditions, mental health care, or even routine medical care such as physicals or long-term maintenance prescriptions, they attract primarily healthy people. Because health insurance coverage costs are driven by the overall risk of a group of people, healthy people leaving the private insurance marketplace leaves less healthy people to burden more costs. This problem is exacerbated when members of health care sharing ministries get sick and decide to enroll in ACA-compliant plans.

Despite the fact that health care sharing ministries are generally not bound by federal or state health insurance regulations, some states have taken action to prevent some health care sharing ministries from expanding.

In Washington, Texas, and Colorado, state insurance regulators have taken action against Aliera Healthcare and its ministry affiliate, Trinity HealthShare, for offering unlicensed insurance products or otherwise misleading consumers to believe that they were purchasing insurance products.

In the state of Washington, the Office of the Insurance Commissioner fined Trinity HealthShare $150,000 after finding that it did not meet the state’s legal definition of a health care sharing ministry. The state’s health-sharing exemption tracks that of the ACA in that it requires health care sharing ministries to have been created before December 31, 1999 and maintain 501(c)(3) nonprofit status. States whose exemptions track the ACA, like Washington, prevent new ministries from entering the market.

After the Texas Department of Insurance successfully obtained temporary injunctive relief against Aliera, the organization agreed to refrain from accepting new business within the state. Colorado’s Department of Insurance similarly issued a consumer advisory demanding that Trinity and Aliera stop operating within the state’s borders, but on the theory that the ministry was using “misleading marketing practices.”

In other states, insurance departments have issued messages to their constituents reminding them of the differences in coverage between traditional health insurance and health care sharing ministries. Consumers “can best protect themselves by understanding the coverage that they participate in,” the Alabama Department of Insurance has written. The Nebraska Department of Insurance has issued a notice filled with bolded letters explaining that health care sharing ministries “are not considered health insurance pursuant to Nebraska law” and that members of these ministries will be considered uninsured.

Until federal and state laws change, many state insurance departments can only try to educate their constituents of the consequences of joining health care sharing ministries or enforce consumer protection laws when appropriate.

Changes to federal law appear unlikely. In July 2019, President Donald J. Trump signed an executive order directing the U.S. Department of the Treasury to propose a regulation that could allow members of health care sharing ministries to finance their monthly expenses through tax-advantaged health savings accounts, a move that if implemented would likely lead to still further increases in enrollment in existing health care sharing ministries.

For now, health care sharing ministries appear slated to continue to operate unregulated throughout the United States, with their membership growth relatively unimpeded.