Rising health insurance premiums and deductibles under the Affordable Care Act (ACA) have led many families to seek alternatives to health insurance. One alternative that has drawn considerable interest and expanded rapidly since the implementation of the ACA are health care sharing ministries (HCSMs).
HCSM members pay monthly “shares” of approximately $200 per individual or $500 per family. As medical needs arise, members pay a portion of their expenses and forward their bills to their HCSM. The HCSM reimburses members for most of their expenses with the share money contributed by other members.
According to The Heartland Institute’s Health Care News, “Approximately 625,000 people in the United States have membership in an HCSM, and enrollment has increased rapidly since implementation of the Affordable Care Act began in 2013.”
HCSMs are not insurance, yet under the ACA, enrollment in an HCSM exempts people from the individual mandate. In an interview with Health Care News, Dale Bellis, executive director of Liberty HealthShare, argues the main difference between the HCSM model and that of insurance companies is HCSMs rely on the participation of willing members. While insurance companies are motivated by profit, HCSMs are motivated by charity and individual choices, a benefit of a nonprofit status.
Current ACA rules require insurers to spend 80 percent of revenue collected through premiums on patients’ medical bills. HCSM have greater flexibility. “Because we are nonprofit, we avoid the profit-motivated bureaucratic middleman approach to health care cost management,” Bellis told Health Care News. “We put health care decisions in the hands of the individual member, restoring the patient-doctor relationship. Our administrative expense target is 12 percent, which means 88 percent of dollars contributed monthly are directed to sharing the medical expenses of our members.”
In an HCSM, all members are aware of the cost of care. This is a vast improvement over the traditional third-party payer system most insurers employ. Under the traditional system, patients are unaware of the real cost of care and are insulated from the high costs the system generates. This leads to inflated costs and a bloated bureaucracy, which increase the cost and complexity of health care. HCSMs give families some skin in the game and more incentive to research health care pricing.
HCSMs could work well with other health insurance alternatives. One service that could match well is direct primary care (DPC). Under a direct primary care program, patients pay a monthly membership fee, typically ranging $50 to $80. As part of the membership, patients receive a more-generous allocation of appointments than they would under most traditional plans, even allowing in some instances for same-day appointments or house calls. The guarantee of a set monthly fee removes the layers of regulation and bureaucracy created by the traditional insurance system and allows physicians to see fewer patients and focus more on each patient.
Some HCSM providers recommend patients combine their DPC membership with membership in a health care sharing ministry. This creates increased savings and coverage. Dr. Brian Forrest, CEO and Network Manager of Access Healthcare Direct in Apex, North Carolina, told HCN dual membership in a DPC and HCSM would cost thousands of dollars less per year than the combined cost of a Bronze ACA plan’s premium and deductible.
HCSMs are the modern equivalent of mutual-aid societies, groups that voluntarily work together to ensure everyone gets the health care they need. States should allow this growth to continue and not move to add unnecessary layers of regulation, as many state insurance commissioners have recommended.
The following documents examine health care sharing ministries in greater detail.
Ten Principles of Health Care Policy
http://heartland.org/policy-documents/ten-principles-health-care-policy
This pamphlet in The Heartland Institute’s Legislative Principles series describes the proper role of government in financing and delivering health care and provides reform suggestions to remedy current health care policy problems.
Despite Increases, Health Care Ministry ‘Shares’ Stay Cheaper Than Insurance Premiums
https://heartland.org/news-opinion/news/despite-increases-health-care-ministry-shares-stay-cheaper-than-insurance-premiums
Hayley Sledge writes in Health Care News about health care ministries and how, despite increasing costs, they remain far more affordable than traditional insurance.
Health Care Sharing Ministry Memberships More Than Double Since ACA Passage
https://heartland.org/news-opinion/news/health-care-sharing-ministry-memberships-more-than-double-since-aca-passage?source=policybot
Jenni White writes in Health Care News about the rapid growth of health care sharing ministries. “As health insurance premiums and deductibles rise under the Affordable Care Act (ACA), more families are turning to insurance alternatives known as health care sharing ministries (HCSMs) to defray health care costs,” White writes.
Patients Save as Docs Combine Direct Primary Care with Cost Sharing
https://heartland.org/news-opinion/news/patients-save-as-docs-combine-direct-primary-care-with-cost-sharing?source=policybot
Jenni White writes in Health Care News about how Some direct primary care (DPC) providers are recommending patients combine their DPC membership with membership in a health care sharing ministry (HCSM) to increase savings and coverage for their health care needs.
Letter: Health Care ‘Sharing’ Model Trumps ‘Insurance’
https://heartland.org/news-opinion/news/letter-health-care-sharing-model-trumps-insurance?source=policybot
In this letter to Health Care News, Dr. John Hunt, chief medical officer of Liberty Healthshare, draws sharp distinctions between health care sharing ministries and health insurers. “The purveyors of health insurance and government programs realized too slowly that in implementing the costly ACA, they have been hoist by their own petard. They then doubled down on their mistakes by imposing all those things the DPC movement rightfully disdains, such as price controls, bureaucratic barriers to accessing care, external interference, prodding, and threats. Health insurance—initially subsidized by and now mandated by the government—is dysfunctional,” wrote Hunt.
Shamelessly Uninsured Self-Pay Patients Pay Themselves
https://heartland.org/news-opinion/news/shamelessly-uninsured-self-pay-patients-pay-themselves?source=policybot
In this edition of the Consumer Power Report, Michael Hamilton examines self-payment for health insurance. “Although self-paying requires a modicum of cash flow and short-term savings, self-pay patients need not be rich. They can and frequently are poor, or close to it, by federal poverty guidelines. And the self-payers we know are aware enough of ACA’s mandates to factor its penalties and exceptions into their cost-benefit analysis,” wrote Hamilton.
Health Care Sharing Ministries: An Uncommon Bond
https://heartland.org/publications-resources/publications/health-care-sharing-ministries-an-uncommon-bond
This report from the Charlotte Lozier Institute assesses space for HCSMs as an alternative to insurance in the health care market.
Direct Primary Care: An Innovative Alternative to Conventional Health Insurance
https://heartland.org/policy-documents/direct-primary-care-innovative-alternative-conventional-health-insurance
Insurance-based primary care has grown increasingly complex, inefficient, and restrictive, driving frustrated physicians and patients to seek alternatives. Direct primary care is a rapidly growing form of health care that alleviates such frustrations and offers increased access and improved care at an affordable cost. State and federal policymakers can improve access to direct primary care by removing prohibitive laws and enacting laws that encourage this innovative model to flourish. As restrictions are lifted and awareness expands, direct primary care will likely continue to proliferate as a valuable and viable component of the health care system.
Where Obamacare Leaves Questions, Direct Primary Care May Offer Answers
https://heartland.org/policy-documents/where-obamacare-leaves-questions-direct-primary-care-may-offer-answers
Proponents of the Affordable Care Act (ACA) set out to remake the U.S. health care system in 2010, but in many respects, the ACA didn’t change the health care paradigm at all; it simply doubled-down on a broken, decades-old status quo that makes health “coverage” a national priority, rather than focusing on limiting health care costs and enhancing health care access. Patrick Ishmael of the Show-Me Institute explores in this essay a promising medical practice model, direct primary care, which he says could deliver on the promises made by proponents of the ACA to lower costs and improve access to quality health care.
Direct Primary Care: Practice Distribution and Cost Across the Nation
https://heartland.org/policy-documents/direct-primary-care-practice-distribution-and-cost-across-nation
Philip M. Eskew and Kathleen Klink describe the direct primary care (DPC) model; identify DPC practices across the United States; distinguish it from other practice arrangements, such as the “concierge” practice; and evaluate data compiled from existing DPC practices across the United States to determine the cost advantages associated with this model. Eskew and Klink say DPC practices lower price points and broad distribution, but data about quality are lacking.
Obamacare’s Impact on Doctors—An Update
http://www.heritage.org/research/reports/2013/08/obamacares-impact-on-doctors-an-updat
In this Heritage Foundation Issue Brief, Alyene Senger outlines several effects Obamacare has on doctors: “Specifically, physicians will be subject to more government regulation and oversight, and will be increasingly dependent on unreliable government reimbursement for medical services. Doctors, already under tremendous pressure, will only see their jobs become more difficult.”
Studies Show: Medicaid Patients Have Worse Access and Outcomes than the Privately Insured
http://heartland.org/policy-documents/studies-show-medicaid-patients-have-worse-access-and-outcomes-privately-insured
In this Heritage Foundation Backgrounder, Kevin Dayaratna states it is becoming increasingly difficult for Medicaid patients to find access to primary and specialty care physicians. As a result, when Medicaid patients are admitted to hospitals, they often arrive with more serious conditions than those with private insurance. By expanding this broken program, Obamacare will only exacerbate the problem. Policymakers should reform Medicaid to allow recipients access to private insurance in a consumer-driven market, Dayaratna writes.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.
If you have any questions about this issue or The Heartland Institute’s website, contact John Nothdurft, The Heartland Institute’s government relations director, at [email protected] or 312/377-4000.
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance.
