The Holy Grail of Health Insurance Alternatives

Published May 12, 2016

Consumer Power Report #505

May 11, 2016

Welcome to the Consumer Power Report.

As health insurance costs grow and provider networks shrink, more Americans are turning to a cost-effective alternative to traditional third-party insurers, despite the Affordable Care Act’s (ACA) mandate that those who can afford to purchase health insurance do so.

Unlike other federal mandate dodgers in U.S. history, a growing number of insurance dodgers are dodging in full compliance with the law. These are budget-savvy, self-pay patients who have found the best way around ACA is straight through it.

Carved into ACA’s individual mandate is an exception for members of health care sharing ministries (HCSMs). Membership in an HCSM costs less than health insurance, accommodates members’ conscientious objections to ACA, and reduces health care price inflation by placing patients directly in charge of their health care costs.

HCSMs operate similarly to insurers, with important distinctions. Instead of premiums, members pay monthly fees commonly referred to as “shares” – a key word in HCSMs’ faith-based paradigm. Sharing for religious reasons is the basis for HCSMs’ exemption. Groups such as Medi-Share, Samaritan Ministries, and Liberty HealthShare maintain Christians have been cost-sharing to meet each others’ needs since the days of the early church, almost two thousand years ago.

Monthly shares are generally about $200 per individual and $500 per family. In most such sharing ministries, organizations collect and redistribute the shares to other members with medical needs, although Samaritan members send shares (and sometimes an encouraging note or prayer) directly to needy members via personal check.

The receiving members pay a portion of their own medical expenses, similar to a deductible. A family within Samaritan’s framework would pay the first $300 for each of its first three non-preventive medical “needs” in a year. Every dollar above this limit is “publishable,” meaning members receive “gifts” (essentially reimbursements) for the remainder of all medical costs – up to $250,000 per need – until the need is met. After a family’s third publishable need in a year, all subsequent needs costing at least $300 are publishable.

This means a typical Samaritan family pays a quasi-premium of $405 per month ($4,860 per year), for a quasi-deductible as low as $900 per year plus smaller-dollar non-publishable expenses.

Contrast these costs to those of health insurance. In 2015, the average family coverage premium was $17,545 per year, with employees contributing $4,955, according to the Kaiser Family Foundation’s 2015 Employer Health Benefits Survey. Employees with high-deductible health plans were then liable to pay a family coverage deductible of $4,345 on average, with 19 percent having an aggregate family deductible of at least $6,000, states the same report. The legal limit on out-of-pocket maximums for family coverage was $13,200.

Despite the huge savings HCSMs offer members over health insurance, many members turn to HCSMs because of conscience instead of cost. “Members are joining primarily on principle, not price,” Anthony Hopp, Samaritan’s director of membership development, told Health Care News on April 7. “It’s a biblical health care option that is consistent with their religious beliefs.”

HCSMs attract some members who qualify for federal subsidies or Medicaid expansion under ACA, but who morally object to receiving taxpayer-funded premium assistance when reasonably priced non-government alternatives are available. Other HCSM members are convinced, or at least suspicious, a small portion of the premiums they would pay for ACA-compliant health insurance might be used indirectly to fund abortions.

Frugal and conscientious, HCSM members benefit the entire health care system by helping to stem the inflation of health care prices. Most members are self-pay patients who frequently pay cash at the time of service, expecting to receive quasi-reimbursements (gifts in the form of others’ shares) in the following months.

As self-payers, members are predisposed to negotiate discounts with providers, who are glad to increase their profit margin by cutting out middle-man insurers. Such savings lower the bottom line for HCSMs, some of which financially reward members who earn large discounts. By contrast, insured individuals typically have no idea what their health care actually costs, and many try to max out their annual deductibles to gain the illusion of “free” health care the rest of the year.

Cost-effective, principled, and patient-driven, HCSMs are the holy grail of health care insurance alternatives. Or, to frame it in terms familiar to HCSM members: What profit it a man to gain health insurance but lose his soul?

— Michael Hamilton



On Tuesday, U.S. Sen. Ron Johnson, R-Oshkosh, introduced the Trickett Wendler Right to Try Act of 2016. A similar bill was introduced in the House in 2015.

The bill aims to ensure that terminally ill patients, their doctors, and pharmaceutical manufacturers are allowed to administer investigational treatments where no approved alternative exists.

“Many of us have felt that sense of desperation – of urgency – when we learn that we or someone we love is fighting for their life,” Johnson said in a statement following a meeting with ALS patients and those affected by the glacial federal drug approval processes.

“In 2014, I met with a brave Wisconsin woman, Trickett Wendler, who was fighting ALS. Trickett passed away last year, but her spirit and her fight are among the reasons I am passionate about this issue – because I know that today, and every day, millions of Americans are fighting similar life-and-death battles to save themselves and their loved ones,” Johnson, chairman of the Senate Homeland Security and Governmental Affairs Committee, added.

There is no cure, and only one drug approved by the U.S. Food and Drug Administration modestly extends survival, according to the ALS Association.

“In an era of unprecedented medical innovation, we have to do more to ensure that patients facing terminal illnesses have access to potentially life-saving treatments,” Johnson said. “These patients don’t have the time to wait – often years and years – for the FDA to grant final approval. For Trickett, and for countless others facing terminal illnesses, now is the time to give more patients a chance to save their lives.”

SOURCE: By M.D. Kittle,


With opioid abuse killing an estimated 19,000 people per year, quadruple the number in 1999, the Food and Drug Administration (FDA) appears poised to defy the American Medical Association (AMA) and take up the mandatory training push.

“I think everybody is more or less coming to a consensus that voluntary is not the way to go,” said Dr. Paul Stander, one of 30 advisers who backed changes to the FDA’s opioids policy last week. “If you’re going to be prescribing a dangerous medication, you ought to be taught to do it as responsibly as possible.”

The vote last week by FDA advisers was broader than whether to require mandatory education, as they urged the agency to rethink its approach to opioids across the board. Still, advocates say that meeting’s debate, which was dominated by calls for training mandates, is an important step.

The FDA rejected similar recommendations on opioid training from outside experts in 2012 despite support for the idea within the administration.

“What we have working in opposition is very strong, well-funded lobbyist organizations, funded by medical associations, who are opposed to anything that’s a legislative mandate,” said Gary Mendell, the CEO of an anti-addiction advocacy group called Shatterproof.

Mendell recalled how Sen. Ed Markey (D-Mass.) struggled to attract cosponsors this year as he pushed legislation on mandatory doctor training. He tried to attach the measure to the Senate’s bipartisan opioids package, but it never came up for a vote because, Markey told him then, “The AMA’s too powerful.”

Dr. Patrice Harris, chairwoman-elect of the AMA and chair of its Task Force to Reduce Opioid Abuse, said the group opposes mandatory training because it is a blunt “one-size-fits-all” approach to a far wider problem.

SOURCE: By Sarah Ferris, The Hill


For months during the Democratic presidential nominating contest, Hillary Clinton has resisted calls from Senator Bernie Sanders to back a single-payer health system, arguing that the fight for government-run health care was a wrenching legislative battle that had already been lost.

But as she tries to clinch the nomination, Mrs. Clinton is moving to the left on health care and this week took a significant step in her opponent’s direction, suggesting she would like to give people the option to buy into Medicare.

“I’m also in favor of what’s called the public option, so that people can buy into Medicare at a certain age,” Mrs. Clinton said on Monday at a campaign event in Virginia.

Mr. Sanders calls his single-payer health care plan “Medicare for all.” What Mrs. Clinton proposed was a sort of Medicare for more.

The Medicare program covers Americans once they reach 65. Beneficiaries pay premiums to help cover the cost of their coverage, but the government pays the bulk of the bill. Mrs. Clinton’s suggestion was that perhaps younger Americans, “people 55 or 50 and up,” could voluntarily pay to join the program.

She made the remarks as she continues to face a determined challenge on the left from Mr. Sanders, forcing her to essentially fight a two-front war as she seeks to turn her attention to Donald J. Trump and the general election. While Mr. Sanders trails by a substantial number of delegates, his effect continues to be felt in the race as he pressures Mrs. Clinton to adopt more progressive positions.

The idea of allowing people to buy in to Medicare has been discussed in policy circles and in Congress for decades. Mrs. Clinton’s husband, former President Bill Clinton, floated a similar proposal in 1998, including it in his State of the Union address that year. The strategy has been embraced by many advocates of single-payer health care as a way to move more Americans into the existing government system. An incremental expansion of Medicare was the hoped-for strategy of Medicare’s original authors.

But it is a new idea in Mrs. Clinton’s presidential campaign. She has called for a range of health policy overhauls to preserve and expand the Affordable Care Act. She has proposed expanding financial protections for people with high health care costs and expanding subsidies to help middle-income people buy their own insurance. She also has proposed a package of policies to lower the price of prescription drugs.

SOURCE: By Alan Rappeport and Margot Sanger-Katz, The New York Times


When insurers set premiums for 2015, they had only a few months of claims data from 2014 and they likely expected the risk corridor program would be fully funded. According to PwC’s Health Research Institute, premiums increased modestly in 2015 – up an average of 5.4% from 2014. The combination of low average premium increases for 2015 and large individual market PMPM cost increases for 2015 means insurers likely incurred substantially larger losses in 2015 than in 2014.

Combining what happened in 2014 with the estimates of premium and spending increases in 2015, my back-of-the-envelope calculations (shown below) indicate that insurers potentially lost upwards of $1,000 per enrollee in 2015, even accounting for payments insurers will receive through the reinsurance program. Through the reinsurance program, the government compensates insurers for a large share of the cost of their most expensive enrollees. Assuming about 30% more enrollees in 2015 than 2014 – about the percentage year-over-year increase in exchange enrollment – insurers’ aggregate 2015 losses selling individual QHPs potentially exceeded $10 billion.

SOURCE: By Brian Blase, The Apothecary