Obamacare sidestep

Kent and Rosaria Butterfield purchased a 2014 health insurance plan under the Affordable Care Act, even though it cost more and required them to change doctors. The plan worked fine, but a surprise awaited them at the end of the year: As an author and speaker, Rosaria’s unpredictable income had exceeded their sign-up estimate and triggered one of Obamacare’s many fines.

In 2015, facing insurance premiums of $1,300 per month, the Butterfields decided to explore what they had heard about from friends: healthcare sharing ministries. The Butterfields joined a group called Medi-Share and immediately saw their monthly cost drop to $750—and Kent, 53, may trim an additional $80 if he can lower his cholesterol.

“I would still love to see healthcare costs go down, but the Lord has definitely provided,” said Kent, pastor of First Reformed Presbyterian Church in Durham, N.C. “A lot of my fellow pastors have done the same thing.”

The Butterfields’ story is similar to that of thousands of families throughout the country. High deductibles, skyrocketing premiums, and limited options through government-run exchanges are fueling explosive growth among healthcare sharing ministries, organizations that allow members to help pay one another’s medical expenses. The arrangement is not insurance, but it qualifies as coverage under Obamacare. Since 2010, the number of American adults and children covered by the largest healthcare sharing ministries has approximately tripled, with hundreds more applying each week.

“I don’t think we had an idea that perhaps we would grow this fast,” said Tony Meggs, president of Christian Care Ministry, which runs Medi-Share. “When you have a law that radically changes the way people purchase health care, [it’s] hard to predict the results of that.”

Among healthcare sharing ministries, the three largest groups—Samaritan Ministries International, Medi-Share, and Christian Healthcare Ministries—account for the bulk of enrollments, with more than 310,000 members as of early 2015, according to a December Charlotte Lozier Institute (CLI) study. There’s no obvious reason the bill-sharing groups can’t continue to grow, said CLI President Chuck Donovan. Their biggest threat may come from regulators and politicians unhappy that the groups are succeeding while Obamacare flounders: “The national political people tend to be jealous of things they don’t control.”

IN 1991, TED PITTENGER, a self-employed painter in Illinois, launched a healthcare bill-sharing nonprofit, with three friends serving as board members. For office space, a ministry member remodeled the Pittenger family’s chicken coop. “We used to store [advertising] cassette tapes in the bathtub,” said Anthony Hopp, the current director of membership at the organization, Samaritan Ministries.

Early growth was slow: By the end of its first year, Samaritan had 55 members. By 1996, it had 200. Enrollment increased steadily, but a surge came in March 2010 when Congress passed the Affordable Care Act. The law exempted bill-sharing participants from the individual mandate that requires all Americans to buy health insurance.

Samaritan has grown from about 15,000 households in 2010 to more than 56,000 this month—representing more than 182,000 adults and children. “We’re getting between 100 and 300 applications per day,” said Samaritan board member Daniel Coughlin, a 34-year-old father of four in rural Kansas.

Coughlin joined Samaritan in 2009 shortly before he and his wife Tamra went to the mission field, where they had their first child. Providers billed them in Mexican pesos with the amounts written on sticky notes, but that didn’t hinder the sharing process: “I got on the [phone] line ready to be defensive and very precise, and the member services guy prayed with me and jumped through hoops in order to get all of our expenses in a form they could publish.”

‘I remember thinking, “This is crazy.” … Living by faith isn’t the same thing as limiting risk. It was a step of faith.’ —Daniel Coughlin, Samaritan Ministries board member

Many people migrate to healthcare sharing ministries because they offer significantly lower monthly costs. CLI’s study of the three largest organizations found members typically saved between 45 percent and 60 percent of the cost of health insurance sold on the individual market. Other benefits, which vary by organization, include no abortion cost-sharing, reimbursement of travel costs associated with medical procedures, and the equivalent of deductibles that can reach zero if a member secures provider discounts.

Those benefits come with significant risks: The groups do not guarantee payment of bills, generally cannot be sued for nonpayment, and do not cover pre-existing conditions. Coughlin joined Samaritan three years after he was diagnosed with cancer at age 25, so his potential cancer-related care (which he didn’t end up needing) prior to five years of remission would not have been shareable: “I remember thinking, ‘This is crazy.’ … Living by faith isn’t the same thing as limiting risk. It was a step of faith.”

Healthcare sharing ministries emphasize they are not insurance, and they don’t cover some things people would normally associate with health insurance—such as immunizations, prescription medication, or alternative doctors and therapies.

Members with regular health needs may often bear significant up-front costs for medical services, some of which may not be shareable. Last year the Butterfields incurred some $4,000 in out-of-pocket costs for preventative care such as colonoscopies, mammograms, and well-child visits. But they got their doctor back and had other expenses reimbursed. They plan to stay with Medi-Share in 2016, Kent said. “I like the concept. … They’re concerned about both physical health and spiritual health.”

The three largest ministries are Christian-based and members must sign a statement of faith and agree to attend church regularly and abstain from extramarital sex, regular tobacco use, and excessive alcohol. But not all groups are designed exclusively for Christians. Texas-based Altrua HealthShare requires members to sign a statement of standards that is biblically based but open to anyone.

“[We] believe that we can share the gospel of Christ through a very unique ministry that is outreach-focused through medical cost-sharing amongst its members,” said Altrua Executive Director Randall Sluder, who noted the program has grown from about 750 member households in 2010 to 1,800 today.

ALTRUA MEETS THE FEDERAL GUIDELINES established for all healthcare sharing ministries—including the provision that only those in existence prior to Dec. 31, 1999, can provide coverage that exempts members from Obamacare’s individual mandate and accompanying tax.

“This space is being taken up by very worthy Christian organizations, but a couple more would probably pop up if Congress hadn’t limited it,” CLI’s Donovan said. “If somebody wanted to form a healthcare ministry for those who hike 10 miles a day or have vegan diets, they should be able to do it.”

In 2014, some 7 million Americans wrote checks to the Internal Revenue Service for failing to comply with the Affordable Care Act’s individual mandate—a number alarmingly close to the estimated 9.1 million who paid for insurance through state and federal exchanges in 2015. Department of Health and Human Services Secretary Sylvia Burwell estimated this year’s enrollment will top 10 million—less than half of what the Congressional Budget Office originally projected.

“The costs of insurance and especially deductibles are exploding,” said Donovan, who predicts even more people will turn from traditional insurance to healthcare sharing ministries.

But not all observers are happy with the ministries’ swelling numbers. Critics say the lack of a “claim reserve”—a requirement for insurance companies—makes the unregulated groups technically insolvent. And they complain the ministries are attracting too many healthy people.

“They have the potential to destabilize the market by drawing off the good risk,” Mike Kreidler, Washington State’s insurance commissioner, told The Wall Street Journal in early January.

Kreidler ordered Samaritan to cease operation in Washington in April of 2011, saying it was operating illegally as an unregistered insurance company and must submit its policies for review. “Our insurance laws exist to protect consumers and make sure that insurers live up to their promises,” he told the Seattle Post-Intelligencer at the time. “Members of groups like this don’t have those protections.”

The following month, then-Gov. Christine Gregoire signed a bill exempting healthcare sharing groups such as Samaritan from state regulation. Other states have since followed suit, officially deregulating the ministries.

Calls for regulation are not without cause: In 2004—after $34 million in unpaid medical bills sparked numerous investigations—an Ohio jury ordered Bruce Hawthorn, the founder of the Christian Brotherhood Newsletter (now Christian Healthcare Ministries), to pay $14.7 million in damages after he embezzled member funds. Hawthorn allegedly spent $728,200 of member funds on excessive salaries for his family members as well as credit cards, rent, and travel expenses for a 21-year-old exotic dancer.

Although ministries typically stipulate that disagreements must be handled through mediation, medical bill disputes have sometimes led to lawsuits. In 2007, Oklahoma pastor Andy Bowman filed a lawsuit claiming Medi-Share unfairly denied payment for bills related to his heart problems. Medi-Share said the bills were due to an undisclosed pre-existing condition, and the suit was eventually settled out of court.

Despite the potential drawbacks, thousands continue to flock to healthcare sharing ministries. The groups’ biggest challenges today? Keeping up with the rapid growth and serving an increasingly diverse membership.

“In the early days, you know, only the weirdos do this. Everybody was like-minded,” said Hopp, calling Samaritan’s statement of faith a gatekeeper. “The idea of ‘sharing medical needs’ doesn’t sound so fringe anymore.”

Hikes in health insurance premiums in the individual marketplace since last year vary from state to state. According to the conservative chamber of commerce Freedom Partners, these five states saw the largest premium increases in 2016:

State

Minnesota*

Alaska

Tennessee*

Hawaii

Oklahoma

Average

+47.7%

+39.1%

+35.2%

+30.0%

+29.4%

Listen to J.C. Derrick discuss this article on The World and Everything in It.

Disclosure: In 2015 WORLD News Group switched from a traditional insurer and became a participant in one of the healthcare sharing organizations that advertise in WORLD. We maintain a strict separation between editorial content and advertising, and typically do not run stories about advertisers, but we chose to do so in this case because the rapid growth of healthcare sharing ministries is newsworthy.