Health care ‘cost sharing’ companies, which don’t guarantee coverage, are on the rise

The number of Americans who sign up for health care sharing plans -- which are similar to health insurance but don’t guarantee coverage -- is on the rise.

January 3, 2020

More than 1m people have joined alternative health care “cost sharing” associations, which offer lower premiums than traditional health insurers — but no guarantees they will actually provide coverage.

These nonprofit organizations, typically affiliated with religious groups, are growing due to demand from desperate consumers. But, as the NYT reports, several US states are now working to ban them entirely, alleging they mislead consumers.

So, how do they work?

These organizations are created to enable people with shared religious beliefs to share health care costs, and they are allowed to exist under federal law mostly because of a religious exemption.

  • Like health insurers, these companies collect monthly payments from their members to provide coverage for eventual medical bills. 
  • But unlike health insurers, they are under no obligation to pay out medical claims.

These associations typically decline to cover people with preexisting illnesses, and they can refuse to cover certain illnesses (like mental health) at their choosing. They can also set limits on how much they will pay out.

But people keep choosing these plans because they’re desperate

These plans are often far cheaper than traditional health care plans that are required to provide coverage for preexisting conditions under the Affordable Care Act, making them an attractive option.

Several of these companies are huge:

  • Samaritan Ministries, based in Illinois, has 271k members
  • Medi-Share, based in Florida, has 400k+ members

According to estimates, there are ~400 of these medical-sharing ministries.

But members of some of these networks end up saddled with bills exceeding $100k.

And some states believe that this type of sharing is NOT caring

Since these companies don’t technically offer insurance, they’re not bound by federal oversight. But regulators in some states have begun fighting back.

Last week, Washington state fined health sharing provider Trinity Healthshare $150k for operating as an unauthorized insurer — and banned it from operating in the state. Trinity also stopped operating in Texas after being named in a lawsuit there.

Despite opposition, these companies are still growing, thanks in part to aggressive marketing techniques. In the past 9 years, membership in health care sharing ministries has increased 600%.

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