Is health care sharing a good alternative to health insurance?

With health insurance being front and center due to the implementation of the Affordable Care Act, questions have arisen as to whether Christian-based “health care sharing” programs offer a reasonable alternative to traditional health insurance.

According to CNBC, about 150,000 people participate in these plans, with Samaritan Ministries, Christian Medi-Share and Christian Healthcare Ministries being three of the leading plans.

Based on trust

What is a health care sharing program? It is a group of individuals coming together with the help of an administering organization to share in the payment of each other’s medical expenses. That sounds a lot like insurance, but it’s not.

Insurance companies actually take on a legal obligation to pay claims according to the terms of the policy. A certain amount of financial risk is legally transferred to the insurance company. No such legal transfer of risk occurs with health care sharing plans.

Participants in such plans remain legally responsible for all of their medical bills. The system is based on trust and moral responsibility (not a bad thing!) as opposed to a legal contract.

In addition, these organizations are not regulated the way traditional insurance companies are. While the plans are not insurance, there are similarities between the two approaches. Insurance companies charge premiums in order to purchase a policy, while health care sharing plans set a “share amount” based on a number of criteria, including how many are in the family, their ages and the amount of financial responsibility a participant accepts before sharing kicks in (similar to one’s deductible with traditional insurance). There are also the equivalent of co-pays with these plans.

Pros and cons

While I like the concept of these programs, there are a number of concerns I have, including:

1) The relatively small number of people participating in such plans. If these programs are going to become a force in the health industry, the pool of participants needs to grow substantially.

2) Limits on coverage for pre-existing conditions.

3) Upper limits on benefits that could leave one with substantial bills in the event of serious illness. Purchasing a high-deductible “catastrophic” plan is likely to be necessary when using medical sharing plans.

4) While there are certain exemptions related to the plans in the ACA, given the turmoil occurring, there is no way to know if these type of plans will continue to be available for the long term.

5) Traditional insurance companies play a major role in negotiating “discounts” for policy holders, which are typically very substantial compared with the “retail” price. While health care sharing organizations negotiate as well, due to the relatively small number of participants, their ability to do so will be limited. As a result, participants carry an increased responsibility for negotiating their own pricing, which increases financial risk.

One of the primary benefits of Christian medical-sharing plans is that they don’t pay for such intrinsic evils as abortion and contraception. At a time when the right of people of faith to not pay for such services is being undermined by the ACA, this is an important consideration. Of course, how closely such plans adhere to Catholic principles will vary since the leading ones are not Catholic organizations.

Another approach?

That raises an interesting question. If such plans continue to be viable under the ACA, maybe there is an opportunity for the Church, through an organization such as the Knights of Columbus, to develop a well thought out approach that builds on the strengths of medical share while minimizing its weaknesses.

If you are interested in participating in such a plan, compare the costs and benefits of multiple providers, including traditional insurance, before making a decision. God love you!

Phil Lenahan is the president of Veritas Financial Ministries and the author of “7 Steps to Becoming Financially Free” (OSV, $19.95). Submit questions for columns to askphil@osv.com.