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A Faith-Based Insurance Substitute Inspires Little Faith

hands folded, as in prayer, resting on an open book

How the government should resolve America’s health care crisis is a question that starkly divides the country, but it is hard to dispute that there is a crisis.

Rising health insurance premiums, higher deductibles and markets with limited choice are all well-documented. Much of the discussion about the problem focuses on the risk of a health insurance “death spiral” as healthy individuals decide to go uninsured because of prohibitively high premiums.

But maybe just as concerning, some people are turning to alternatives that present a separate set of financial risks.

Crowdfunding, once largely the domain of aspiring filmmakers and ambitious inventors looking to fund their products, has become a resource of last resort for those without health insurance – and sometimes the insured – facing urgent medical bills. While some individuals have managed to get significant help by activating their social network, crowdfunding campaigns can have wildly different outcomes depending on the individual’s circumstances. Inspiring, easy-to-digest narratives, such as a young mother diagnosed with breast cancer, tend to attract more attention than chronic conditions or those with more stigma attached, such as Type 2 diabetes or mental illnesses.

At BuzzFeed News, Anne Helen Petersen observed that crowdfunding health care is the 21st-century equivalent of “mutual aid” or “benefit” societies, which were historically widespread in America, especially in the late 19th and early 20th centuries. But in the last few years another type of coverage has been gaining steam: health care sharing ministries.

As the name suggests, these organizations have a religious aspect, typically Christian. They are nonprofit organizations in which members pay one another’s medical costs through an agreed-upon monthly donation. While they are not insurance providers, sharing ministries satisfied the (recently repealed) individual mandate provision of the Affordable Care Act, almost always at a much lower monthly cost than regular health insurance. Between lower costs and, in some cases, the appeal of knowing the organization will not support birth control or abortion, more than 1 million Americans have turned to this particular alternative.

It is important to realize, however, that the lower costs come with real and important drawbacks. Sharing ministries do not use actuaries and do not accept any risk. No laws regulate who they must accept as members or which costs they must cover; many of them disallow pre-existing conditions or come with lifetime benefit caps. Given the health insurance industry’s poor reputation, it is hardly surprising that many Americans are willing to make such a trade-off, but joining one of these organizations means operating without a regulatory safety net. And if the sharing ministry declines to share your expenses, you are on the hook for the full cost of your care.

This option is not open to every American, even if they are willing to bear the inherent risks. Of the five biggest health care sharing ministries, all require members to sign a faith statement, only one of which is conceivably broad enough to cover individuals from various faith backgrounds. Some require regular church attendance.

When compared to crowdfunding on one extreme and expensive traditional health insurance on the other, though, health care sharing ministries and their moderate financial obligations have reached a significant slice of the population who feel that few other options are practical. And these plans are especially attractive to people in good health – the very population that traditional insurance badly needs to keep in order to make their business model viable in the long term.

Due to rising premiums, I researched and briefly considered signing up with a health care sharing ministry late last year, during the open enrollment period for health insurance policies. While my family is all blessed with good health, I decided the risk involved with this type of coverage was much too great. I have two young boys who like to run fast and jump off of things, and the more worried I get, the funnier they think it is. The benefit of saving a few hundred dollars per month on lower monthly premiums is far outweighed by the risk of a large expense that isn’t covered.

Individuals and families can evaluate their options and weigh the costs and benefits of different ways of paying for health care. But on a societal level, we should be concerned that so many people find traditional insurance – which certainly has problems of its own, but which includes built-in consumer protections that alternatives lack – a financially unappealing or practically impossible option.

Government-suggested alternatives from both sides of the aisle are not much more practical. Most of the health care co-ops championed by Democrats at the advent of the Affordable Care Act have folded in the face of financial reality; only a few remain in operation. Meanwhile, the Trump administration’s effort to expand association health plans raised concerns among state regulators, who have warned that lax rules for such plans could lead to insurance products that don’t cover fundamental needs such as hospitalization or prescription drug expenses.

Competition alone won’t substantially drive down the cost of health insurance in markets where customers have few, if any, choices, or when plan pricing and features are so opaque that individuals cannot meaningfully compare them. Until we take significant steps to make health insurance, and health care in general, more affordable to everyday Americans, some of them will turn to alternatives that may not be in their best interest for the long term. For the health care system as a whole, these alternatives are more placebo than panacea.

Vice President and Chief Investment Officer Paul Jacobs, of our Atlanta office, is the author of Chapter 20, “Giving Back,” in our firm’s most recent book, The High Achiever’s Guide To Wealth. He also contributed several chapters to the firm’s previous book, Looking Ahead: Life, Family, Wealth and Business After 55.

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