Washington State: Insurance Commissioner pulls plug on fraudulent "healthcare sharing ministries"

I haven't written about "Healthcare Sharing Ministries" as much as I should have. This is from my only substantive blog post about them 3 years ago:

A health care sharing ministry is an organization that facilitates sharing of health care costs between individual members who have common ethical or religious beliefs in the United States. A health care sharing ministry does not use actuaries, does not accept risk or make guarantees, and does not purchase reinsurance polices on behalf of its members.

Members of health care sharing ministries are exempt from the individual responsibility requirements of the Patient Protection and Affordable Care Act, often referred to as Obamacare. This means members of health care sharing ministries are not required to have insurance as outlined in the individual mandate.

In other words, sharing ministries are essentially one of the last remnants of non-ACA compliant coverage. Unlike official ACA-approved policies, coverage through these organizations appears to amount to pretty much whatever the ministry says it is. The Reason article specifies "catastrophic" medical bills, while the Wikipedia definition above specifies that they can still kick you to the curb for whatever reason they want to (which doesn't sound very Christian to me, but hey, I'm Jewish, so what do I know?).

From a free-market capitalistic POV, I suppose this sounds fantastic, since there's zero regulation...oh, wait, what's that?

Most ministries are oriented toward practicing Christians, with restrictions like abstaining from sex outside of marriage, excessive drinking, tobacco, and illegal drugs. They usually require members to make a statement of belief as well. For instance Samaritan Ministries requires an statement of Christian faith including belief in the triune God and divinity of Jesus; Liberty HealthShare is more inclusive, accepting members with a wide variety of religious and ethical beliefs.

All such ministries require that members subscribe to the ethical principles of individually responsibility for health, and helping others in need.

According to several articles I've read over the years, enrollment in Health Sharing Ministries have increased dramatically since the ACA fully ramped up in 2014, from around 200,000 members to well over a million as of a couple of years ago; for all I know it's up to a couple million today. Granted, there isn't any ACA individual mandate in 48 states anymore, so it's possible that enrollment has tapered off...but the main appeal is that they're cheaper than ACA plans, especially for unsubsidized enrollees. Of course, the reason they're so much less expensive is, once again, due to the fact that they can cherry pick enrollees, don't have to cover pre-existing conditions, and aren't subject to most of the consumer protection provisions of ACA plans.

In this sense, they're a lot like #ShortAssPlans, as I explained in Part 2 of my Risk Pool explainer video.

Given the loose regulations on Health Sharing Ministries, the potential for fraud and other types of mischief is rampant...and sure enough:

BUSTED:

OLYMPIA, Wash. – Insurance Commissioner Mike Kreidler today ordered Aliera Healthcare, Inc. (Aliera) and Trinity Healthshare, Inc. (Trinity), both of Delaware, to immediately stop selling health insurance illegally in Washington state and engaging in deceptive business practices.  

Aliera, an unlicensed insurance producer in Washington, has been administering and marketing health coverage on behalf of Trinity Healthshare. Trinity represents itself as a health care sharing ministry, which would be exempt from state insurance regulation. A legal health care sharing ministry is a nonprofit organization whose members share a common set of ethical or religious beliefs and share medical expenses among members. 

Kreidler’s office has received more than 20 complaints from consumers. Some people believed they were buying health insurance and did not know they had joined a health care sharing ministry. Many people discovered this when their claims were denied because their medical conditions were considered pre-existing under the plan.

“Legitimate health care sharing ministries offer a valuable service to their members,” said Kreidler. “Unfortunately, we’re seeing players out there trying to use the exemptions enjoyed by legitimate ministries to skirt insurance regulation and mislead trusting consumers. I want these outfits to know we’re on to them and we will hold them accountable.”

Kreidler’s investigation into Aliera found:

  • It provides misleading training to sales agents about the nature of its products.
  • It promotes misleading advertisements to consumers.
  • It inaccurately represents Trinity’s statement of faith as outlined in its bylaws.
  • It is operating both as a health care service contractor and a discount plan organization without a license.
  • It is selling insurance without a Washington insurance producer license.

Kreidler’s investigation into Trinity found that it fails to meet key federal and state requirements:

  • Trinity was formed on June 27, 2018, with zero members. Federal and state law require that health care sharing ministries be formed before Dec. 31,1999 and their members must have been actively sharing medical costs. 
  • Its bylaws require members to adhere to a Protestant expression of Christian faith. However, its website markets memberships to people of all faiths and its training materials for producers note that Trinity simply requires a belief in a higher power and a healthy lifestyle.  

Despite repeated requests from Kreidler’s office, Aliera and Trinity have failed to disclose the number of policies sold in Washington state.  

Both companies have 90 days to demand a hearing in front of an administrative law judge.