​One of the bills being considered in the Utah Legislature this session would create reporting requirements for “health care sharing ministries.” Although the law specifically provides that these ministries are not insurance companies, the bill would require them to report to the insurance commissioner each year on how much money they take in as contributions, how much in payments participants ask the ministry to help with, requests that are denied, and similar information.

Understanding the policy issues this legislation seeks to address first requires an understanding of the ministries themselves.

 Where do healthcare sharing ministries fit in the market for health coverage?

Simplifying dramatically, the spectrum of approaches available to families and individuals for paying for healthcare services ranges from insurance on one end to cash payments on the other.

An insurance company contracts with individuals who are charged a fee (premium) for an insurance policy. This comes with the understanding that a certain amount of the medical expenses that individuals incur (often also family members) will be paid by the insurance company. The remainder of the cost is paid by the person being insured.

Insurance policies are typically offered by private companies (e.g., most employer-based insurance) or by government agencies (e.g., Medicare and Medicaid). In the United States, a large proportion of insurance coverage is accessed through an employer, who pays a significant portion of the insurance premium for the employee and possibly the employee’s dependents. A key benefit of health insurance is that the companies can negotiate with medical providers to secure lower costs for those covered. The individual costs of insurance premiums are also tax deductible under some conditions.

On the other end of the spectrum, an individual may be unable or unwilling to purchase an insurance policy or access government funded programs like Medicaid. For these people, a minority of the population, they must pay for their own medical costs out of pocket. Often, medical providers are willing to give significantly discounted rates for medical services to these individuals, perhaps less than the rates charged to insured patients – but unlike the insured, these individuals have no guarantee of help in making their payments, which, in some circumstances, can be catastrophic.

Healthcare sharing ministries are an innovative model that exists between these two points on the medical payment spectrum.

What are healthcare sharing ministries?

They are nonprofit organizations whose participants share a similar faith and agree to help share medical expenses of fellow participants. The participants make contributions which the ministry uses to help other participants to meet medical expenses. Since it is a “sharing” arrangement, there is no guarantee that all expenses can be met – this differentiates sharing arrangements from health insurance.

For some people who do not have insurance or have religious reasons for preferring a sharing arrangement, sharing ministries can provide relief from medical expenses with required contributions that are less than many insurance premiums. These ministries may also have limits on covered services (such as not paying for abortions) and caps on how much they can reimburse that are different from those required by state or federal laws. Medical providers may or may not work directly with them as they do with insurance providers.

Thus, while they have some features that are similar to insurance companies – pooling resources from a number of people to meet medical costs – they are probably closer in function to cash payers since they have financial limits on how much they can provide (insurance companies have government backing if they are short of funds). Some even require a participant to pay and then be reimbursed.

Why are healthcare sharing ministries of interest to state policymakers?

These ministries would probably get little attention except for a unique change in national healthcare policy in 2010. When the Affordable Care Act was enacted, it included a mandate that meant individuals who did not have insurance would have to pay a penalty. The law also included an exemption from this penalty for individuals participating in a healthcare sharing ministry. This exemption was modeled on longstanding exemptions from mandatory participation programs, like Social Security. These exemptions are offered to religious groups such as the Amish who provide care to one another and object to substituting government assistance for such care. (The original penalty no longer applies.)

The mandate appears to have drawn attention to and increased participation in healthcare sharing ministries. Given the nature of the ministries, the cost of participation is often less than insurance premiums. Thus, when insurance is not available through an employer; the costs are prohibitive; or an individual has religious concerns about public insurance programs, healthcare sharing ministries provide a valuable service to underserved and vulnerable individuals and families.

What are the concerns about healthcare sharing ministries?

Healthcare sharing ministries are a relatively recent innovation compared with many legacy actors in the health industry. As innovation often generates industry disruption, the expansion of healthcare sharing ministries has led some to express concerns about ministries – typically linking back to how they differ from insurance companies.

Thus, some ministry participants and medical providers have complained about medical bills not being paid. Some government agencies have expressed concern that the ministries may be able to engage in unethical conduct.

Those with a religious perspective would probably be first to recognize that in a world of greed and temptation, there will be abuses of even the best ideas. Some high-profile cases of fraud have been prosecuted, as they should be.

Some concerns raise more nuanced issues about the religious nature of ministries and their approach to providing services to participants.

What are the responses to some of these concerns?

Religious motivations: Some are skeptical of the religious motivations of healthcare ministries, particularly when they are not associated with a familiar denomination or any denomination at all. That may reflect, however, a misunderstanding of the nature of religious charities. Some are formally sponsored or overseen by denominations with a clear hierarchy and well-known statements of belief. Others are unaffiliated but still motivated by sincere religious convictions.

Religious requirements: Some ministry participants object to being asked to affirm a religious belief in order to participate. This is based on a fundamental misunderstanding, since the nature of the ministries, and the rationale for their legal exemption, is religious. There may be instances in which some ministries have not been clear about this. However, it also seems likely that some ministry participants believed that they could take advantage of an exception to regular insurance without understanding why it was being provided.

Paying for health services: Some medical providers express concern that participants in healthcare sharing ministries ask to be given discounted rates for service provided to cash payers. If the ministries were the functional equivalents of insurance, that might be a more valid concern, but they actually operate in ways that may justify the treatment participants seek.

An uninsured person seeks a discount based on his or her limited resources. A participant in a healthcare sharing ministry is also limited in the resources available. In the former case, the patient asks for a discount so that payment better aligns with personal resources. In the ministry context the same principle is at play. Ministry participants ask for a discount because that individual, assisted by some others, has limited resources.

Covering health services: The religious nature of the ministries may also explain concerns about the exclusion of certain services. It would be fundamentally unfair, however, to expect a religious organization to be inconsistent with its religious mission by providing services about which it has moral objections. Excluding some services that participants won’t utilize because of their beliefs can also reduce costs to the other ministry participants.

Similarly, like insurance companies, healthcare sharing ministries will have limitations on what they cover. These limitations can be significant because a charity can only distribute what it has to give.

With wise stewardship of contributions, that amount can be significant and provide tremendous relief to beneficiaries. Strains from onerous administrative obligations, an influx of participants (caused, for instance, by changed incentives in federal law), or overspending on administrative costs can all lead to disappointed expectations and a subverting of the purpose of the ministry.

What should lawmakers do, or not do, about healthcare sharing ministries?

For policymakers in particular, but probably also for potential participants and medical service providers, greater understanding of the purpose, motivations and nature of the ministries is essential. That knowledge and its dissemination will allow better identification of which ministries may be bad actors and which ministries provide critical assistance to individuals and families in real need. This will also make it likelier that interactions with the ministries are consistent with principles of religious freedom – protecting the ability of sincere believers to provide help that benefits society as a whole.

Taken as a whole, these dynamics point to the conclusion that further study of healthcare sharing ministries by policymakers and policy research organizations (like Sutherland Institute) would be the prudent step forward. Regulating ministries before a broader and deeper understanding of them is achieved would be premature. It would threaten the good apples along with the bad.