Many Americans purchase individual policies from health insurance carriers. Since the advent of the Affordable Care Act, the marketplace for such policies has changed. If you purchased an individual policy issued before 2010, and you maintained that policy in place, you are “grandfathered in.” You can continue to purchase that policy – provided the carrier still sells the plan. Whether or not the carrier still sells that flavor depends upon the policy’s profitability.
Each year, fewer and fewer people purchase such a plan. No new insureds can purchase grandfathered plans – and many existing customers are moving into new plans. So, the risk distribution in grandfathered plans is contracting – and will continue to contract – and prices will likely rise.
Of course, you can buy a new plan on state or federal health insurance exchanges. That’s one of the benefits of the Affordable Care Act. You will not be foreclosed from moving into a new policy even if you have pre-existing health conditions. But, many such migrants are experiencing sticker shock. Such plans (if not subsidized with tax credits) have “ginormous” deductibles. Monthly premiums are often higher.
Given that individuals are required by law to purchase an approved health insurance plan, are there alternatives to high-cost, bloated policies with stratospheric deductibles and cost-sharing?
Yes.
A health sharing ministry is a voluntary, charitable membership organization that agrees to share medical bills among its membership. Three are open only to practicing Christians. Christian Care Ministry, which supports a typcial plan, Medi-Share, defines practicing Christian by asking for the following commitment – members sign an attestation of Christian faith and promise to abstain from tobacco, illegal drugs and sex outside of marriage; certain things, such as abortion and contraception, aren’t covered.
A 4th organization is more flexible in terms of its requirements– Liberty Healthshare. One need only formally attest to a personal commitment to religious liberty.
The Affordable Care Act treats these as bona-fide exemptions for the individual mandate. They are not insurance companies, per se. You are considered “self-pay”; but the organization agrees to step up to make payments to providers.
In practice, you would identify as self-pay. You then try to negotiate the best rate possible in advance of receiving care. The health ministry will then make the payment after the deductible (and cost-sharing, if applicable) is satisfied.
You can’t always plan your medical care. Sometimes needed care is urgent; sometimes emergent. In such circumstances, haggling over price might begin after care is rendered. In the self-pay world, one’s bargaining position weakens after services have been delivered. Still, most practitioners – and institutions – will negotiate to receive timely, reasonable payment that might be significantly higher than would have received from a traditional indemnity carriers. Further, health ministries have infrastructure in place to assist with post-treatment negotiation.
Cost for one plan is ~450/month; and purchase of such plans are probably not tax deductible.
What’s the downside?
Health sharing ministries have no contract. There’s no legally binding agreement that bills will even be paid. And, if bills are not paid, you are individually liable. Also, if the organization runs out of cash, there’s no state guaranty fund to back up the program – as there would be if a regulated carrier filed for bankruptcy. (Still, a state guaranty fund typically pays only pennies on the dollar anyway – with the policyholder still potentially on the hook for remainder of unpaid medical bills). Since the programs are not regulated by the Affordable Care Act, they may legally shun patients with pre-existing conditions. One program, Christian Care Ministry, will not pay for some pre-existing conditions, such as cancer, until an enrollee has been symptom-free (and off treatment and/or medication) for a number of years.
Still, Tony Meggs, chief executive of Christian Care Ministry, says the service routes payments between members and has never failed to pay a participant’s bills.
Many people are concluding the benefits of health sharing ministries outweigh the risks. Christian Care Ministry counted 64,000 members in September, 2013. Membership is now ~110,000.
Unless the numbers such groups insure increase geometrically, the chances of their survival are unlikely. Their first goal is to search for an “underwriter” who is willing to take on the increased risk associated with very expensive claims, such as permanent injury, childhood injury or vegetative state situations.
100,000 members is not enough to attract an underwriter willing to take on very, very large claims. So small groups such as this must severely restrict their coverage of catastrophic situations.
All it takes is a couple of motorcycle injuries that result in a vegetative state claims and these organizations will be bankrupt, without surcharging their members. They would have to have severe restrictions on their coverage to survive, not just eschewing tobacco or un-married relationships, but absolutely NO recreational vehicle or dangerous sports coverage (includes sky-diving, skiing and snow-boarding.)
These ministries are now in what is called by underwriters the “honeymoon” period. But cherry-picking insured always comes to an end. Always.
Then come the lawsuits against the insurance providers and they always end up spending more to defend them than they can collect from their customers, who will desert them like the sinking ship they are.
Michael M. Rosenblatt, DPM
Thanks for providing awareness of an Alternative Payment model as permitted by the Affordable Care Act. It is most helpful to review these small business opportunities for not only the provision of coverage for employees but potential negotiation options not in the traditional insurance arena. There are many non conglomerate medical practices which do not benefit in negotiations merely as a result of the number of physicians and costly services provided by the practice. Yet these Physicians have internally invested workflow strategies for providing cost effective care preventing need to access expensive services. I would suggest that health sharing organizations may find value utilizing physician practices which have worked feverishly to implement effective preventive and chronic disease management protocols toward the goal of creating healthcare access for all.
Who knew? In NJ, I doubt these health sharing ministries exist. If they did, I could imaging many 30 second TV commercials from these entities – “OCare premiums killing your business and family?”
Any alternative to the ACA would be welcome. Our practice just saw a 12% increase in OCare in 2015. Last year’s plan is no longer offered, and the crap Aetna HMO for our family of 5 is over $1400/month with $2500 deductible per person. Can you spell WTF? 🙂
E: Samaritan Ministries International operates freely in all 50 states.
Mr. Rosenblatt, health care sharing ministries have been operating since the 1980s (Samaritan Ministries since 1994). Samaritan is currently sharing $10-$11 million per month in needs.
Mr. Rosenblat,
We have been part of Christian Healthcare Ministries for 10 years. We have 4 children and twins born with complications and long hospital stays. There hasn’t been a qualifying bill that hasn’t been paid. Choosing faith and the ideal of helping take care of each other has worked far better for us than any traditional insurance could. I agree it’s not for everybody: 1st you must have faith.
Thanks to both respondents who extolled the success of their “narrow risk” group health insurance for religious believers. Actuaries have long known that in order for narrow-risk small groups to survive large claims, they must of necessity reduce their coverage on numerous fronts and make qualification for entry very strict.
Cherry picking insured is not applicable to the general community and will always only cover only a small range of healthcare problems. There are other examples, like the so-called free insurance which is co-written on life and accident policies for traumatic amputation of one or more limbs. Such accidents are extremely uncommon to the point of being almost impossible. So, they are included “for free.”
Another example is for nursing home insurance for extended care. These policies must strictly limit payouts to specific amounts which will not be exceeded. I myself was the victim of such a policy, which went into receivership, negating the value of my previous premium payments. All the policies did was to enrich the CEO’s of the insurance company. When I wrote them about this, not surprisingly they did not respond…
Insurance faces all of the realities of the real-world. Limited risk insurance providers must carefully monitor their under-writing and pay-outs if they want to survive. Some also fall victim to board members’ graft and corruption.
A word of advice to the people who wrote in: You need to have careful monitoring of your executives/signatories for their activities. Small, private insurance groups are often targets for serious embezzlement, most of which comes from drug and gambling addictions.
A word to the wise….
Michael M. Rosenblatt, DPM