Faith-Based Cost-Sharing Runs Into Challenges in Washington State
A controversial decision in Washington state pitted state health care regulators against a cooperative charitable organization, exemplifying some of the hazards of increased government regulation of the industry.
Samaritan Ministries International, one of the nation’s largest faith-based health care cost-sharing ministries, was targeted by a Cease and Desist order from the Office of Insurance Commissioner (OIC), headed by Washington state insurance commissioner Mike Kreidler. In the order, the OIC asserted Samaritan Ministries “endangers Washington residents by enticing them to forego legal insurance through false assurance that their medical bills will be paid.” The state legislature stepped in, however, and affirmed the organization’s right to exist.
An estimated 100,000 people in the United States belong to faith-based health care cost-sharing ministries, and that number could increase in the coming years because members are exempted, for religious reasons, from the individual mandate in President Obama’s health care law.
These nonprofit entities essentially act as a go-between for donations, coordinating with members of Christian communities who help each other pay for large medical expenses. However, on occasion state regulators mistake these communities providing voluntary assistance for insurance, and make attempts to regulate it as such.
According to Samaritan Executive Vice President James Lansberry, the OIC’s attempt to shut down Samaritan’s operations in Washington is a “real-life example of how a government can undermine private sector innovation and prohibit the free exercise of citizens’ religious and economic rights.”
The order to shut down in Washington was unprovoked, Lansberry said, and was not in response to a member complaint.
“To our knowledge, none of our Washington State member’s medical bills have gone unpaid,” said Lansberry. “Samaritan Ministries has never received any complaints from the insurance commissioners in any of the other states in its 17 years of operation.”
Prompted by Media Inquiry
According to an OIC spokesman, the order was prompted by a TV reporter seeking to do a story on a Samaritan member and questions which arose regarding Samaritan’s legal status.
“Our insurance laws exist to protect consumers and make sure that insurers live up to their promises,” Kreidler said in a statement. “Members of groups like this don’t have those protections.”
Kreidler noted Samaritan hasn’t registered as an insurer or submitted its policies or reserves for review. In the order, the OIC accused Samaritan of “offering a health plan … where every purchaser, and covered person has not been advised of the lack of insurance or other coverage.”
Not Claiming It’s Insurance
Yet Lansberry points out applicants to Samaritan must sign numerous warnings and disclaimers before attaining membership, and these documents repeatedly emphasize the ministry does not assume any risk or guarantee any member’s medical bills being paid, putting an explicit disclaimer before consumers.
Samaritan’s disclaimer includes the statement, “This ministry is not operated by an insurance company nor is it offered through an insurance company. Samaritan Ministries and its members assume no responsibility for your medical bills. Whether you receive any share money to help you with your medical needs will depend on the voluntary giving of your fellow members as an expression of Christian love, but no matter how much money you receive you always remain solely responsible for payment of your own medical bills.”
Lansberry maintains the Cease and Desist Order was sent without communicating with Samaritan or giving them a chance to explain why their method is not insurance.
“The approach was one of ‘shoot first, ask questions later,’” Lansberry said. “It is ironic that the actions that the OIC began to take against Samaritan Ministries to ‘protect’ consumers would have actually prohibited members of Samaritan in Washington from assisting each other with their medical bills.”
Passing the Plate
Samaritan members send their monthly payments directly to other members with medical burdens—not to the ministry itself.
“The financial ‘reserves’ that the OIC was concerned about are simply the Christian commitment of Samaritan’s members, and the only way to draw upon those sources is by members giving to other members as the ministry suggests. The OIC’s order short-circuited this process,” Lansberry said.
Lansberry says the OIC’s definition of insurance is so broad it would not only apply to Samaritan but also to churches taking up a freewill offering to help a person with medical expenses, or even to personal gifts from one person to another.
Legislature Resolved Issue
Once the Washington Legislature learned of the Commissioner’s action, both houses added a provision to a larger bill recognizing health care sharing ministries are not health insurance and exempting them from regulation as third party payers. Washington Governor Chris Gregoire (D) signed the overall measure into law on May 11, prompting the OIC to voluntarily withdraw the Cease & Desist order.
“This is the prudent thing for the Department to do,” said Lansberry. “If the Department had persisted with this order, hundreds of people who are effectively and efficiently sharing each other’s medical needs would, at best, have had their access to assistance disrupted. Samaritan Ministries is not a third party payer and is obviously providing a private innovation that truly works for many people – how was this ever perceived as a problem?”
According to Samaritan, sixteen states have statutory provisions explicitly recognizing that health care sharing ministries are not insurance, and two additional legislatures have recently passed similar laws which are awaiting Governor’s signatures.
Benjamin Domenech (firstname.lastname@example.org) is managing editor of Health Care News.