Over the last few months, state officials have increasingly acted to warn consumers about the potential risks of enrolling in health care sharing ministries (HCSMs). HCSMs are organizations in which members often share a common set of religious or ethical beliefs and agree to make payments to, or share, the medical expenses of other members. HCSMs operate either by matching paying members with those who need funds for medical expenses or by pooling all monthly shares received and administering payments to members directly. In this way, HCSMs offer a form of healthcare coverage. However, they have long maintained that they are not a health insurance company. Unlike traditional health insurance, HCSMs argue that they assume no risk on behalf of consumers, and they make no guarantee that members’ claims will ever be paid. Therefore, HCSMs do not meet the federal definition of health insurance and are not subject to the Affordable Care Act’s (ACA) consumer protections, such as the requirement to provide coverage for preexisting conditions.
In a 2018 study published by the Commonwealth Fund, we found that at least thirty states have enacted rules exempting HCSMs from state regulation. This means the HCSMs in those states do not have to comply with the standards and requirements applicable to health insurers. Yet, we also found that many of the elements of HCSMs closely mimic those of traditional insurance coverage. For example, among the five ministries reviewed, all required members to make a monthly contribution akin to a premium in order to be eligible for sharing; two advertised health plans at gold, silver, and bronze coverage levels, similar to ACA compliant plans; and all had established payments that acted as deductibles. Because of these similarities, many state regulators interviewed expressed concern that consumers might enroll in a ministry believing it is comprehensive insurance, only to later find out that it is not. In particular, state regulators found it concerning that HCSMs – which are largely unregulated and unlicensed – were increasingly marketing and advertising their products.
Now, a year later, some states have seen these concerns come to life. At least ten states – Alabama, Colorado, Georgia, Maryland, Nebraska, New Hampshire, Rhode Island, Texas, Washington, and West Virginia – have taken a range of action to educate consumers on HCSMs or to guard against recent fraudulent practices. Alabama, Nebraska, and West Virginia issued alerts reminding consumers that HCSMs are not insurance and are not supervised by state regulators. Nevada encouraged consumers to be wary of telemarketers and websites that may falsely advertise products, and posted information warning that HCSMs are not insurance.
Several states have taken legal action against one entity – Aliera Healthcare – which administers, markets, and provides support services for Trinity Healthcare, which represents itself as a HCSM. Aliera reportedly has 100,000 members nationwide and collected $215 million in revenue in 2018. After receiving numerous consumer complaints regarding these companies, Colorado, Texas, and Washington issued ceased and desist orders to prevent them from operating in the states. In Colorado, the Department of Insurance explained that it was “concerned that they [Aliera and Trinity] may be using misleading marketing practices, blurring the lines between health insurance that complies with the requirements of the ACA and non-compliant insurance . . . the companies may be putting consumers at risk [.]” In Washington, the Insurance Commissioner found that Trinity did not satisfy the definition of a HCSM and was therefore operating as an unauthorized insurer. Its investigation found that Aliera did not accurately represent Trinity’s beliefs, and that it had provided misleading training to agents and misleading advertisements to the public about HCSM products. For example, Aliera’s marketing did not describe the faith-based nature of HCSM plans, but rather, marketed the plans as “next generation Healthcare products [.]” The state also found that Aliera’s use of traditional insurance terms, like “Gold,” “Silver,” “Bronze,” and “Catastrophic,” led consumers to mistakenly believe they were purchasing insurance. As a result, the state fined the companies over $1 million. In Texas, the state filed a lawsuit against Aliera to prevent it from engaging in the business of insurance without a license. In its complaint, it explained that the DOI has “collected evidence of significant customer complaints” against Aliera. When the DOI contacted some of these individuals, they indicated that they believed Aliera had offered them a comprehensive insurance product and “were surprised when their claims were not paid.”
As a result of these legal actions, other states – like New Hampshire and Georgia – have issued warnings about Aliera or other bad actors that may use the façade of a HCSM to skirt state regulation. States are also reminding consumers that while HCSMs may be appropriate for some individuals, consumers should enroll with their eyes open. As Rhode Island’s Department of Business Regulation noted, “[l]ower up-front costs can seem attractive to consumers, and the shared religious or ethical beliefs of the members may appear reassuring, but the potential risks associated with these products are high.”
While much of the activity has focused on Aliera’s deceptive activities, the company is not the only HCSM-related entity that has come under fire recently. According to some sources, Ohio’s Department of Insurance and Attorney General’s Office has received over 30 complaints this year regarding Liberty HealthShare – another HCSM. Many of the complaints suggest that consumers’ bills “aren’t being addressed quickly or paid at all [.]” In fact, based on the volume of complaints, the Better Business Bureau has currently assigned Liberty an “F” rating.
Take-Away: While some consumers may find value in HCSMs, including those that continue to operate in good faith based on their original intent, these arrangements can come with significant financial risk. HCSMs are not insurance, do not promise to pay claims, and do not provide comprehensive coverage. However, because HCSMs look and sound like insurance, consumers often enroll in HCSMs without understanding their limitations and coverage exclusions. States’ concerns regarding HCSMs’ potentially misleading advertising has not been unfounded. Aliera provides one example of how entities may use HCSMs’ unregulated status to skirt oversight and take advantage of consumers. This latest activity shows that states are increasingly keeping an eye on HCSMs. Regulators should continue to guard against bad actors, while educating consumers on how to select the right plan for their needs.
To learn more about HCSMs, you can access our full Commonwealth Fund brief here.