Growing in a loophole

When Obamacare reached its third birthday in March, House Democrats celebrated with reports of the healthcare overhaul’s early achievements: Seventy million additional Americans receiving free preventative care, 3 million young adults covered under their parents’ health insurance plans, and seniors saving $6 billion in Medicaid prescriptions.

Those milestones weren’t reversing the country’s skepticism, though. A Kaiser Health Tracking Poll found just 37 percent of Americans had a favorable view of Obamacare, down 9 percentage points from three years earlier. The Heritage Foundation noted the law’s 18 tax hikes would cost Americans $836 billion through 2022, and that 7 million Americans would lose their employer-sponsored insurance by then. After 2014, Obamacare will make employee insurance too expensive for many businesses.

For all its perceived benefits and harms, the Patient Protection and Affordable Care Act seems to be having one effect that liberals—and perhaps even conservatives—almost certainly didn’t foresee: Many Christians are leaving the insurance market to join healthcare sharing ministries, organizations where members pay for one another’s medical bills. These groups, though not technically insurance, oversee networks where thousands of monthly “gifts” cover members’ eligible medical expenses. Healthcare sharing ministries were increasing in popularity before the Affordable Care Act’s passage, but have seen a surge in membership in the past three years.

Executives at the three major healthcare sharing ministries— Samaritan Ministries International in Peoria, Ill.; Christian Care Ministry in Melbourne, Fla.; and Christian Healthcare Ministries in Barberton, Ohio—all told me in interviews their new member growth accelerated after the passage of Obamacare in 2010.

Samaritan, the largest such organization and the only one that provided WORLD with annual figures, grew by about 600 member households in 2008 and by about 800 in 2009. The next year—when the healthcare law was signed—Samaritan added 2,000 households. In 2011 and 2012, more than 3,000 households joined each year. The organization added its 24,000th family in March, representing 80,000 individual members, and was on pace to surpass last year’s growth.

“There are people out there who are looking for a pro-life, consistently Christian option, especially in the face of things like the birth control mandate,” said James Lansberry, the executive vice president of Samaritan Ministries. Lansberry said his organization had been growing consistently before the healthcare overhaul: “Rising healthcare costs have been around 15 or 20 years. The Affordable Care Act has only been around for three.”

Howard Russell, the president of Christian Healthcare Ministries (CHM), said his organization has about 17,000 member families, with 7,500 of those added since April 2011. (Disclosure: I’m a former CHM member.) “They’re flocking in,” said Russell. “I can’t say officially it’s [due to] Obamacare, but I can’t say it isn’t.”

Tony Meggs, the president of Christian Care Ministry, which runs Medi-Share, said his group’s bill-sharing program had experienced accelerated growth since 2010, at 15 to 20 percent per year.

“There’s no doubt that there’s a part of our population that doesn’t like the idea of government encroachment into healthcare,” said Meggs. “It doesn’t matter if you come from the left side of the aisle or the right side of the aisle, you’re going to find something in that law you dislike.”

Together, the three healthcare sharing ministries currently claim over 170,000 individual members. (Some smaller sharing ministries exist. One, Altrua HealthShare in Austin, Texas, did not return my calls.)

Among the complaints conservatives have raised against the 900-page Affordable Care Act: It forces employers to pay for insurance policies covering birth control and abortifacients and forces individuals to buy insurance or pay a fine. But thanks to early lobbying efforts, Congress added a loophole to the law providing members of healthcare sharing ministries with an exemption from the individual mandate.

Christians who have recently joined the bill-sharing groups may not be doing so merely to flee Obamacare: When asked, some point to the rising cost of insurance.

Terrell Hess, 32, a public school teacher from Early, Texas, said he and his wife had agreed she would quit her job as a school secretary when they had kids, but the $600 or so his employee insurance policy took from his paycheck each month made the budget too tight. They de-enrolled from insurance, joined Samaritan in 2011, and now pay $355 a month for a family of four, allowing Hess’s wife to be a full-time mom.

When his wife had their second child (a boy) last summer, Samaritan members reimbursed all the Hesses’ hospital bills, including for an emergency caesarean section performed after the baby’s umbilical cord became pinched during delivery. Hess appreciated the handwritten words of encouragement and prayers other Samaritan members offered: “You don’t just get a check in the mail, you get Hallmark cards.”

“From the spiritual side, it strikes me that we ought to be showing a better way to the world,” said David Madeira, who hosts a morning talk show in Scranton, Pa. “The world is wrestling with this issue of how do we cover healthcare, how do we pay for things?”

A company that hosted Madeira’s health savings account informed him in 2010 that, because of the impact of the new healthcare law, it would no longer be offering his HSA. Madeira signed his family up with Samaritan (they had been members in previous years), which covered $15,000 in medical bills when Madeira and his daughter flipped over a go-kart in 2011.

He vividly remembers the accident: “I’m hanging upside down. I can smell and feel the cold gasoline running down my back. … And I look down and my arm has two elbows.”

Today his arm has one elbow and an 8-inch titanium rod.

In addition to being a radio host, Madeira works for Infinity Concepts, a branding and public relations firm near Pittsburgh. Samaritan executives are in talks with Infinity about how to manage their unprecedented growth.

The three organizations don’t attribute all their growth to the healthcare law, but to rising insurance premiums and a renewed interest among Christians in meeting one another’s medical needs. All three groups require members to sign a Christian statement of faith, abstain from tobacco and illegal drugs, and live by biblical principles such as abstinence from extramarital sex. “Usually when unbelievers hear about it, they’re a little miffed that they don’t have access to it,” says Madeira.

The executives from the three ministries are optimistic about growth but admit they can’t predict the future. Until Obamacare is fully implemented, they won’t know all the rules and dynamics of the new health insurance market. They could lose some lower-income members who decide to switch to a government-subsidized insurance policy.

Although states could potentially pose problems for healthcare sharing ministries through various regulations, many have passed friendly “safe harbor” laws giving legal recognition to such groups. Earlier this year Kentucky shut down Medi-Share in the state after a decade-long dispute, but legislators have worked out a resolution (see sidebar below).

The ministries don’t see any upper limit to the membership growth their sharing models could handle. Russell of CHM said growth would simply be “a matter of having the number of employees necessary to serve the number of members.”

Growth seems inevitable: Enrollment in the state insurance exchanges will begin in October, and the penalty for not having insurance will begin next year, motivating the uninsured to seek individual health policies. According to a March study by the Society of Actuaries, an Illinois group that calculates insurance risks, by 2017 the number of people with individual insurance plans will more than double, to nearly 26 million. Meanwhile, claims costs for that group could rise by a third.

Instead of getting insurance, though, many people could jump through the loophole and become healthcare sharing ministry members.

Bluegrass tangle

When a new Kentucky law takes effect this summer, it should end a decade-long legal battle that earlier this year forced 300 families in the state to suspend or abandon their membership in Medi-Share, a healthcare sharing program serving more than 56,000 Americans (including me).

Louisville pastor Darin Anderson’s family was one of those affected. Anderson, 37, left traditional insurance in 2011 to join Medi-Share, a move that lowered his family’s $1,100 monthly premiums to $500. The family also paid a lower family deductible than Anthem Blue Cross and Blue Shield’s fee of $2,500.

With his evangelical church picking up the cost of their health coverage, the move made a lot of financial sense in a congregation of about 100 people, where every penny counts.

“In 2012 they carried $6,000 of our expenses and still paid less than when we were at Anthem,” said Anderson, whose medical bills last year amounted to more than $10,000 after his youngest son had a serious seizure and another son broke two bones.

In January, though, Medi-Share temporarily ceased operations in Kentucky after Christian Care Ministry (CCM), the Florida-based organization running the program, lost a legal dispute with state insurance regulators. The cutoff affected more than 750 people, including the Andersons, who chose to switch their membership to Samaritan Ministries.

“I consider it a government intrusion,” Anderson said of the state’s involvement. “In my mind, a Christian nonprofit is much different than a multimillion-dollar insurance company. It baffles me.”

A primary sticking point with state regulators was Medi-Share’s past method of using a trust account to process members’ medical bills. (In contrast, regulators ruled Samaritan legal because members directly reimburse each other.)

Although Medi-Share amended its system in 2009 by establishing electronic bank accounts to facilitate direct payments between members, the state continued to press its case. It took involvement from the Kentucky legislature to reinstate the program. During this year’s session that concluded March 25, lawmakers overwhelmingly passed a clarification of Kentucky’s “safe harbor” statute, verifying that sharing ministries could operate without fear of violating insurance rules.

Chief sponsor, Kentucky Sen. Tom Buford, said messages from panicked pregnant women and a couple planning to move across the state line so they could remain in Medi-Share prompted him to act.

“We have Baptist, Catholic and Amish groups who do the same thing,” said the Nicholasville Republican, who estimated more than 3,000 state residents share medical bills. “If the state wanted to take them on, they could have shut them down too.”

Buford’s bill will take effect June 25. Meanwhile, Medi-Share is waiting to meet with state insurance officials to discuss resuming Kentucky operations. Once it secures final approval, Anderson intends to return to the organization.

For the most part, states seem willing to allow sharing ministries to operate without interference. Nearly half already have safe harbor provisions, and other states are considering them, said former CCM president Robert Baldwin, who temporarily rejoined the organization as national policy director to resolve the Kentucky dispute.

Baldwin pointed out that in over 19 years Medi-Share paid more than $26 million of Kentuckians’ medical bills and had only two complaints filed against it—from hospitals that said they should have been paid faster.