Hunting for Cheaper Medical Coverage

INDIANOLA, Iowa (DTN) -- A religious-based exemption in President Barack Obama's health care law is suddenly becoming an attractive alternative for some small-business owners who find escalating health insurance premiums too pricey.

Fewer than a half million people in the U.S. are now controlling their health care costs by legally opting out of health insurance with no penalty and joining faith-based "health-care sharing ministries." It's not health insurance per se -- it's more like a large self-funded health care group. Depending on the program, monthly payments fall in a more reasonable range of $300 to $700 per month per family. And, when you make a claim, money is sent to you by other members in the program to pay your health care bills.

The need to reduce health insurance costs has reached a critical level for most small-business owners. Bushnell, Illinois-veterinarian Shawn McKim was paying over $13,000 per year in health insurance. He was able to reduce that to $8,000 per year by switching to a high-deductible plan, but soon his premium climbed to $10,000. Then, two years ago, his insurance company terminated his policy because it was not in compliance with the Affordable Care Act and premiums for a new policy would jump another 17%. So McKim turned to Christian Healthcare Ministries to cover his health care bills. Now he pays $5,400 per year for himself and his family.

Brett Chatterton, who farms near Avon, Illinois, has been paying his health care bills through another faith-based health share organization, Samaritan Ministries, since the mid-1990s. He pays $405 per month for himself, his wife and their six children still at home.

WHAT'S THE CATCH?

First of all, the four ministries offering these types of programs -- Christian Healthcare Ministries, Samaritan Ministries, "Medi-Share" Christian Care Ministries and Liberty HealthShare -- require their members to live by Christian principles. Some require a signed statement from your church's minister. You cannot smoke, abuse alcohol or prescription drugs, or use illegal drugs. The ministries won't reimburse for abortions or contraceptives. Pre-existing conditions are only fully covered in the fourth year that you are in the plan. Prescriptions often aren't covered, or if they are, only the first 120 days of medication are paid for through the program. In most plans, preventative care such as immunizations, mammograms and colonoscopies are not covered. Doctor visits generally are not covered.

Also, Samaritan will never share medical bills under $300. Christian HealthCare Ministries does not reimburse expenses under $500. For Medi-Share you can choose your annual out-of-pocket maximum from $1,250 to $10,000.

"Generally, however, the money I save with a lower monthly payment can cover my other health-care costs," explained Chatterton.

HOW IT WORKS

In the case of Samaritan Ministries and Christian Healthcare Ministries, a member with a health care claim sends his itemized bill with a need request to the ministry headquarters. "Then, that month we assign a certain amount of members to that person. Our members receive a share assignment every month -- who to send their money to. It's very personal," explained James Houck with Samaritan Ministries in Peoria, Illinois. "The person with the medical need has a list and checks off the money as it comes in and sends the list back to us. We hold our members accountable to make their monthly payment," Houck added.

"Every month I get a statement with a name and an address of someone who has a medical bill to pay," Chatterton said. "I send that person a check for $405 and a note with a prayer. And I pray for them throughout the month."

"I like the fact that the money we're giving is going to Christians who need it and not to the shareholders of a for-profit insurance company," noted Lindsay Luecht, of Springfield, Illinois, who has been with Christian Healthcare Ministries for seven years.

Medi-Share, on the other hand, is more centrally structured and the company sends a check to the person with a medical need.

"We've never had a problem with reimbursements," said Chatterton, who has had several large claims of $45,000 and $52,000. "The program doesn't pay for ear infections or prescriptions. But if the infection leads to out-patient surgery putting tubes in the ears, they'll go back and you'll get payment for the entire cost back to the original doctor visit."

COST TRANSPARENCY

The most eye-opening aspect of the faith-based programs is members discovering the cost of health care. "Guess how much it cost to put tubes in my 2-year-old son's ears?" asked veterinarian McKim. "Ten thousand dollars."

The ear, nose and throat specialist gave McKim a bottle of ear drops for his son. Online the cost for that drug was $200. The hospital charged McKim $610. "I wish everyone got an itemized statement -- even those who have health insurance -- to see how much hospitals and doctors are charging," McKim said. "In another claim we had, our dermatologist charged $600 to apply medicated cream on one spot. That did not include the cost of the office visit or for the drug, just to apply the cream with a Q-tip."

The dermatologist spent much of the follow-up appointment checking the price in disbelief. "I don't think even the doctors know how out of whack their prices are," said McKim.

Members of the faith-based health share programs have to do their own negotiating with the health care providers to reduce charges. "You tell your doctor you are 'self-pay' and ask for a discount. Generally, you can get a 10%-15% discount," said Chatterton.

Cost negotiation is the biggest challenge for Luecht. "You have to deal with the health-care provider and their billing department. Bills can be cryptic and hard to figure out. Even trying to call around and get a price for a doctor visit is hard to do," Luecht discovered. "You have to do all the administrative work, too -- keeping track of all the bills, what's been paid out and what's been reimbursed. But we figure the savings are worth the administration work."

Luecht and her husband pay $3,740 per year for their health share plan for herself and her husband. They pay $50 per month for their 2-year-old son who is on a state-subsidized plan.

Chatterton also uses the state-subsidized plan for his children when he is eligible. Agriculture is an up-and-down business. Chatterton, in addition to raising corn and soybeans, also custom farms, owns a precision planting dealership and has a fleet of 17 semi-trucks.

"About half the time, we qualify for public health care for our kids, especially when we had all eight kids at home. And, half the time, we don't," he noted.

CAVEATS

Iowa Commissioner of Insurance Nick Gerhart warned that people need to understand these are not insurance companies, so they are unregulated. There are no guaranteed funds available if the company goes out of business. "But they are legal under the Affordable Care Act," Gerhart noted. Another drawback in his view is that ministries do not negotiate on behalf of their members to lower health care expenses, as insurance companies do.

"However, these plans could work for some people," he told DTN, although there is an inherent risk because, ultimately, the company does not have to cover your medical bills.

"You have to decide what's right for your family," advised Gerhart. For now, there have not been widespread complaints and medical bills have been covered. But Gerhart cautioned, "It may work, until it doesn't."

EDITOR'S NOTE: For more DTN-Progressive Farmer coverage on health care reform, go to http://www.dtn.com/…

Elizabeth Williams can be reached at elizabeth.williams@dtn.com

(MZT/AG/SK)

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