MORE CHURCHES START PAYING FOR HEALTH-CARE SERVICES, LEAVING STATES TO CONFRONT THE QUESTION: ARE THESE GROUPS INSURERS?

Volume 29, Issue 516 May 27, 2008

Matthew Gever

Faith-based groups have long been active in health-care delivery, most visibly through religion-based hospitals and running community clinics. In recent years, religious groups have expanded their forays into the health-care arena, and some are now looking for ways to set up formal, quasi-insurance organizations, funded by parish members, to help other parishioners pay their medical bills.

"I absolutely think it’s the wave of the future," said Representative Joe Armstrong of Tennessee. This is especially the case as more congregations combine into large mega-churches that serve thousands of parishioners. "As they grow larger they will be looking to provide some level of care to fill a gap for people who aren’t insured," said Rep. Armstrong.

The rise of such organizations raises multiple important questions for states: should these groups be regulated like insurance companies, e.g., should they be required to cover all medically necessary procedures and establish sufficient reserves to ensure that all members who have had procedures have their bills paid? Or, because they are funded by voluntary donations from church members and because they do not formally enroll members, should they be excluded from state regulation as insurance companies?

This question has made its way to the floor in the Sunshine State. Florida lawmakers recently passed Governor Charlie Crist's "Cover Florida Health Access Act," (SB 2534), a comprehensive health reform plan (See SHN issue 510 for more information). Inserted into the bill was an amendment that would exempt faith-based health-care programs from oversight by the state's Office of Insurance Regulation if the group qualifies under federal guidelines as a non-profit religious organization.

"We set up a new category in our statutes that says if you're a religious organization that pools your interest and pools your money together then the state will leave you alone," said Representative Aaron Bean.

The amendment allows faith-based groups to establish rules for behavior among its participants, stipulating that the group must make clear in writing that it is not an insurance company. The groups' members vote on what qualifies for membership and payment while a board of directors oversees administration.

Groups such as Medi-Share, a Christian-based health program pools money and shares medical costs among its members, who must also be active in a church. Members who want to participate send monthly dues to the company, which then creates an account for each family. When a family needs a bill paid, the company moves the money around between accounts, what it calls "sharing" of medical bills, while the company makes no promise of bills being paid, which it says separates this practice form traditional insurance. Monthly dues range from $53 up to $570, depending on a persons age and family status as well as their chosen level of "Initial Member Responsibility," which is what the patient has to pay out of pocket before receiving assistance from Medi-Share. These range from $250 per incident up to $10,000. So if a doctor bill or a prescription costs less than this amount, the patient is entirely responsible for the cost. However, after the IMR, the patient is not responsible for any of the bill. According to the group's website, they have negotiated rates with a network of about 750,000 providers across the country. Use of other providers would result in the patient receiving less shared money.

"Technically it is not insurance because it's not a risk-based product," said Representative Bean. Others beg to differ. In Montana, the District Court ruled in 2007 that Medi-Share is in fact insurance, since the group uses health histories and actuarial principles to determine eligibility and rate structures. Courts in Kentucky ruled differently, saying the state's insurance code does not apply to religious groups.

Medi-Share will help pay for basic services such as physician visits, hospitalization, testing and some prescriptions. Not included is payment for treatment of any pre-existing conditions or procedures such as cosmetic surgery, abortion or fertility treatment. Additionally, participants have to agree to certain lifestyle restrictions such as no non-marital sex and abstention from alcohol, tobacco and other drugs. Anyone caught engaging in these behaviors is subject to expulsion from the program.

Legislators in Florida decided to add the amendment exempting Medi-Share and other groups because there was concern that OIR might shut them down or force them to conform to standards set for traditional insurance companies. Currently, about 7,000 Floridians are enrolled in Medi-Share and legislators feel that faith-based health care may be a way to help tackle the problem of the uninsured.

"From our standpoint we're looking for ways people can take care of themselves and if a group or individuals can find a way—anytime you can do it outside of government, more power to you," said Representative Bean.

Currently, ten states have exemptions that allow organizations such as Medi-Share to function, while four states have ruled that such religion-based organizations are in fact insurance and subject to state regulations.

"I think we need to establish federal guidelines for these health-care efforts, just like we did for HMOs, PPOs, whatever," said Representative Armstrong, hoping that. "They should be recognized as 501(c)3s by the IRS, and their administrative costs and what monies are actually going out to help their ministries should be monitored."

Regulation of faith-based health care often comes up in discussions of other social services such as child day-care and addiction treatment centers. Critics contend that faith-based groups are exempt from oversight of how they spend their money—something other large non-profits are required to report. Additionally, church plans are under no contractual obligation to pay for medical bills, potentially leaving a patient stuck with a high bill and no legal recourse. The non-faith-based groups also contend that their administrative costs are significantly higher because of their need to comply with state regulations. Supporters, however, contend that faith-based groups have been operating and providing services since the country's origins and presently provide a low-cost option for those who want to participate.