//  7/18/17  //  In-Depth Analysis

On Thursday, Senate Majority Leader Mitch McConnell released the latest draft of his effort to repeal the Affordable Care Act (ACA). As of last night, it appears that this version of the bill is dead, with four Senators declaring that they won’t vote to move it forward. But provisions of this bill are worth talking about, both for what they reveal about health insurance and for what they reveal about the process by which the Senate is considering ACA repeal.  The latest draft contains a number of new provisions, but two caught my eye: (1) Senator Ted Cruz’s attempt to bifurcate the individual insurance market and (2) a clause about membership in a health care sharing ministry as satisfying the requirement of “continuous creditable coverage.”

The Cruz amendment has received a large amount of coverage both in the popular press and by more specialized policy outlets. But there has been little attention to the clause about health care sharing ministries. Fortunately, I wrote a 5,000 word book chapter on the ministries as part of an academic conference in 2015 (here I am presenting on the topic, if you’re really interested).

In this post, I’ll first explain what the Cruz amendment does, then explain what health care sharing ministries are, and then explain how these provisions could interact in ways that are detrimental to the stability of the individual insurance market. In other words, I’ll spend almost 2,000 words scratching the surface of how two tiny clauses in a 172-page statutory text interact with each other. Because healthcare is complicated, and literally everyone knew it.

What Does the Cruz Amendment Do?

At its core, Senator Cruz’s amendment permits health insurers to offer plans on the individual marketplace that do not comply with the ACA’s rules and regulations. Insurers offering compliant plans–those that provide insurance to people with pre-existing conditions, avoid charging them more than healthy people, provide the full range of essential health benefits, and include the ACA’s financial protections–could also offer non-compliant plans.

As Secretary of Health and Human Services Tom Price put it, these non-compliant plans would allow insurers to “dust off how they did business before Obamacare.” Under these plans, insurers could deny coverage to people with pre-existing conditions (or at least charge them unaffordable rates); decline to offer coverage for benefits like mental health care, maternity care, or prescription drugs; and there would be no limits on how much patients could be required to pay for their care. As the New York Times noted this weekend, that is precisely the state of affairs the ACA sought to end.

There are a lot of questions about how the Cruz amendment is supposed to work in practice–wonky questions about whether the amendment creates one risk pool or two, as well as practical questions about whether it’s workable at all (insurers themselves say it isn’t). But there is general agreement about what its effect would be on the composition of patients in different kinds of plans. Younger, healthier people would gravitate toward the non-compliant plans, as they did before the ACA. Because these plans cover very little care, they will initially be much cheaper than compliant plans. Those with more substantial health care needs will choose compliant plans. Over time, as healthier enrollees leave ACA-compliant plans for non-compliant plans, the cost of the compliant plans will go up.

Although the choice to enroll in a non-compliant plan may be cost-saving in the short-term, it comes with a consequence in the longer term. The Senate’s bill abolishes the hated individual mandate, but Senators are aware that without an incentive for people to maintain coverage, the individual marketplace will become unstable. So their bill instead imposes a six-month lockout period for those who don’t maintain continuous coverage. Those who go without insurance for at least 63 days in the previous year would be required to wait six months after applying for new coverage before it kicked in.

Here’s the kicker: non-compliant Cruz amendment plans do not count as “continuous creditable coverage” for purposes of this lockout (page 169 of the draft). If an otherwise young, healthy individual with one of these plans is suddenly diagnosed with a serious condition, they must wait six months before obtaining an ACA-compliant plan providing coverage for their condition in the individual marketplace. In that time, they may become much sicker or even die.

What Does This Have To Do With Health Care Sharing Ministries?

I’m so glad you asked. The draft bill contains a separate section noting that “continuous creditable coverage” does “include[] membership in a health care sharing ministry” (page 153). So people who buy health care on the exchanges in non-compliant plans are locked out of the market for six months, while people who choose to join health care sharing ministries will not be locked out for that period of time. Instead, their membership in the ministry will count as “continuous creditable coverage.”

Okay, But We’re Almost 900 Words In And You Still Haven’t Told Me What a Health Care Sharing Ministry (HCSM) Is.

Fair. Essentially, HCSMs are structures in which members of particular religious groups share each other’s medical bills rather than purchase traditional insurance. More technically, the ACA defined health care sharing ministries—in 26 U.S.C. § 5000A(d)(2)(B)as organizations meeting five separate statutory criteria. Some of these criteria are procedural (the ministry or a predecessor must have been in existence since December 31, 1999, and there must be an annual audit) while others are substantive (members of a ministry must “share a common set of ethical or religious beliefs and share medical expenses among members in accordance with those beliefs” and must “retain membership even after they develop a medical condition”).

The ACA established this definition of HCSMs because it exempted individuals who were members of HCSMs from the individual mandate. Possibly as a result, HCSM membership has exploded. In 2011, membership was just about 100,000 nationwide. Today? It’s over a million. I am sure that most new members truly believe in the tenets espoused by these ministries. But others likely do not, as financial websites advise people to research the ministries as a cost-saving alternative to ACA plans, and columnists wonder openly if they should lie about their beliefs to join a ministry. With about 12 million people nationwide in the individual marketplace, one million – or more – healthy opt-outs could have an enormous impact on the risk pool in some states.

Why do I say that the HCSM members are likely to be healthy, in general? In large part because of the membership criteria the ministries impose and the benefits they cover. Members in at least some of the largestministries (if not all ministries) agree not to smoke tobacco or use illegal drugs, and to consume alcohol (if at all) only in moderation. Members also agree to abstain from sexual activity outside marriage. As such, at least some of the largest ministries categorically exclude from sharing certain medical services that are indicators of non-biblical lifestyles, including abortion, contraception, and injuries resulting from the abuse of drugs and alcohol. At least one ministry, Medi-Share, explicitly excludes sharing for “maternity expenses for children conceived out of wedlock."

Some of the largest ministries also exclude routine and preventive care, including physicals, vaccinations, and screening tests like mammograms or colonoscopies. Screening tests may, however, be covered when used for diagnostic purposes, such as if a colonoscopy is conducted to investigate observed symptoms. Medi-Share also categorically exempts mental health care, including both psychiatric and psychological services, while others exclude all psychological services but cover a small amount of psychiatric care. Ministries generally include phased-in limits on coverage of pre-existing conditions.

Membership in an HCSM includes membership in a community. Rather than just receiving a check from a faceless insurer, ministry members with eligible medical bills typically also receive notes or cards from fellow ministry members, who are thinking of them and wishing them well in their time of need. HCSMs feel personal and supportive in a way that insurance does not.

But that’s the thing: HCSMs are not insurance. The ministries are careful not to say that any particular treatment is reimbursable or that its members submit claims. Instead, they say that a treatment is eligible for sharing, such that members’ medical bills will be published for other members to fill. HCSMs themselves note often on their promotional material and websites that they are not insurance companies and that the product they sell is not insurance. Yet someone inserted a provision into the Senate bill stating that membership in a ministry counts as continuous insurance coverage for purposes of the six-month lockout provision.

Why Does This Matter?

If Congress manages to pass a bill including these provisions, we can expect a further explosion in the membership of HCSMs. Healthy young people or families will face the following choice:

1) an inexpensive insurance plan that covers little and will lock them out of more comprehensive coverage for six months should anything happen,

2) an expensive compliant insurance plan that offers more than what the family needs at that particular moment, and

3) membership in an affordable community that covers an intermediate amount of care and doesn’t prohibit enrolling in an expensive plan should the need arise.

Which would you choose? Some number of people who would otherwise have chosen the skimpy non-compliant plans will choose to join the ministry instead.

If the Cruz amendment creates one risk pool between the compliant and non-compliant plans, as Cruz himself states (though insurance experts have no idea how that’s possible), this exodus would create a huge problem. Because in that situation, healthy people haven’t simply exited to the cheaper plan within the risk pool. They’ve exited the system entirely, and only the sick remain. Overall costs and premiums will rise even more quickly. In the end, the ministry provision may destabilize the individual marketplace more quickly than expected.

I’ve written here before about why process matters in health care reform. Republicans are trying to pass this bill without meaningfully engaging with the private actors they will call upon to implement its changes, without holding public hearings, and without considering the true effects of its passage. The health care sharing ministry amendment is just one example of a seemingly innocuous provision that could have significant effects overall, and Senators should pay attention.

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Abbe R. Gluck

Yale Law School

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