by Bill Lindsay
Featured in the March/April 2019 Colorado Medicine.
This brief article is intended as a warning to all physicians in Colorado. You may have in your practice today individuals who participate in Health Care Sharing Ministries as an alternative to health insurance. This is of concern because under these arrangements there is no guarantee that you will ever be reimbursed for the services you perform.
History has demonstrated that when the cost of goods or services get to a boiling point, people seek any alternative that will make that good or service more affordable. Examples include what happened during the gas shortages that we had in the mid-70s (when OPIC raised the cost of a barrel of crude to all-time highs), or when rents in New York City rose during the 1980s (before rent controls were put in place in 1997). Now we are seeing this phenomenon with health insurance.
For the past several years Colorado has been one of the leaders in the promotion of what are referred to as “Health Care Sharing Ministries” (HCSM). What are HCSMs? When did they start?
Think for a moment of being in church when the pastor remarked about Mrs. Jones who was recently diagnosed with a horrible disease, and asked to pass the plate to help her family pay for their out-of-pocket costs, or even their final expenses. We have all been exposed to that concept of “sharing.” Well, although that approach may have had its origins with the Bible, with a charitable intent, the new version is not the same.
HCSMs are pools of individuals who pay into a third-party administrator to pay for each other’s care. This is where the aforementioned “pass the hat” parallel ends. In the modern version what is being proposed is an alternative to buying health insurance.
Why should I be concerned? The greatest concern is that the individuals who participate in these sharing ministries believe that they have found an alternative to the very expensive private insurance that they had previously, or were considering purchasing. Why is this an issue? Private insurance plans in Colorado have to file their rates with the Colorado Division of Insurance. Those rates have to be approved by the state as being adequate and sufficient to enable the insurer to pay their claim obligations. Furthermore, the state maintains regulatory oversight over the operations of those insurers to ensure they are fair and appropriate and follow the terms of the policy that has been sold. Finally, the state maintains a guarantee fund for insurers (non-HMO plans) to ensure that if an insurer fails financially, the other insurers will be able to pay the claims that have been incurred.
The HCSMs provide no such assurances. They are unlicensed entities that do not provide insurance. Moreover, they do not cover claims that may be related to an individual’s behavior or actions if those behaviors or actions are excluded by the contract. Examples would include conditions related to alcohol, drugs, etc. They also do not cover mental or behavioral health.
Our warning is to encourage you to consider individuals with HCSM coverage as self-pay and thus to use existing practice policies (i.e., to require they pay cash for their care, or at least sign a promissory note acknowledging their obligation to you for the services provided). For hospital-based care this circumstance might be more difficult and thus additional concern should
Colorado is one of the nation’s leading states in terms of the sale of these plans and some Chambers of Commerce have even promoted them as a way to offer an alternative to the high cost for traditional insurance.
The governor legislature, and the various state departments are hard at work to address the very real issues with private insurance costs. HCSMs do not provide a solution. They are not insurance.