Open enrollment is upon us. While many are focused on which health insurance company has the best deal, health care sharing ministries (HCSMs) are quietly offering cheaper and less regulated alternatives to traditional coverage. Despite being an inadequate substitute, for some, they’re a welcome one.
What are HCSMs?
HCSMs are not health insurance; they are cost-sharing organizations. The idea is that members help each other directly cover medical costs. Members pay monthly contributions, similar to premiums, but can also make additional donations to cover specific bills from other members.
HCSMs are allowed to exclude pre-existing conditions from eligibility, exclude various health care services altogether, such as maternity care or contraception, and cap the lifetime financial assistance for which a member is eligible. They also do not guarantee claims will be reimbursed. (One review of HCSMs in Massachusetts found that only half of submitted claims were eligible for reimbursement.)
HCSMs and the Affordable Care Act
Because they are not insurance and because they are religiously affiliated, HCSMs are not regulated by the Affordable Care Act (ACA). They are not subject to minimal coverage guidelines and members are not subject to the individual mandate.
HCSMs are a notable exemption to the ACA. Supporters lobbied for the exemption based on a few reasons, including former President Obama’s promise that Americans could keep their coverage if they liked it. But the main motive was religious freedom. They argued that sharing health care costs was a “religious right and a privilege.” Congress agreed to the carveout to minimize religious opposition, and advocates lauded the decision as “Obamacare’s Silver Lining.”
The appeal of HCSMs
Some see HCSMs as a viable alternative to traditional health insurance and research suggests there may be a few reasons why.
Perhaps the most significant reason is freedom: freedom of religious expression and freedom from government oversight. The Bible encourages Christians to “bear one another’s burdens,” and HCSM members see their approach to health care costs as a fulfillment of that command. Additionally, many religious individuals oppose abortion and other medical services. As such, they may see HCSMs as a way to pay for their own health care needs without funding religiously prohibited services even indirectly.
HCSMs promote a sense of freedom beyond religion, including provider choice and less government interference. For example, members essentially pay out of pocket for health care, getting reimbursed later, so they can choose any provider that accepts self-paying patients. HCSMs also allow members to bypass “the system,” staying out of the carousel that is the heavily regulated health insurance industry.
A more tangible reason why some prefer HCSMs to traditional health insurance is thrift. Monthly contributions are typically less than monthly insurance premiums. This makes sense; HCSMs are set up to cover health care expenses after they’re accrued so upfront costs can be lower. Plus, the list of reimbursable services is often limited in exchange for even lower costs.
For healthy individuals, especially those who don’t use much health care, this kind of “low cost up front” arrangement can be enticing. But, if a member has an emergency or an extended hospital stay, or develops a chronic condition, they may be stuck with significant medical bills. Monthly contributions can also increase due to changes in health status, even common ones like weight gain.
While freedom and thrift are conscious reasons to prefer HCSMs, others may choose them due to inadequate health insurance literacy. Individuals less familiar with terms like coinsurance and deductibles may have difficulty choosing from a set of ACA-compliant health insurance plans. This difficulty likely extends to evaluating the relative costs and benefits of HCSMs.
Challenges differentiating between insurance and HCSMs may also increase when small businesses list HCSMs as a potential source of coverage for health care costs. Deceptive advertising by HCSMs and insurance brokers adds further confusion.
While HCSMs are an unregulated, risky alternative to traditional insurance coverage, some find the freedom and cost savings they provide attractive. Others don’t know of a better option and join an HCSM without understanding the potential consequences. Given that inadequate insurance coverage is associated with greater medical debt and delays in seeking necessary care, it’s important that consumers have clear, accurate information to facilitate coverage decisions.