Until last March, Christa Gala and her family relied on health insurance purchased off the Affordable Care Act exchange.

But those plans came with steep premiums and high deductibles for their family of three. For 2017, Gala said, family coverage was going cost them $1,400 a month and come with a $14,000 deductible. Plus, Gala and husband are both self-employed, and for the last two or three years they’ve ended up with steep tax bills because they earned too much to qualify for subsidies and so had to pay that back.

“The ACA just became so cost prohibitive when we couldn’t qualify for any of the subsidies,” she said.

So Gala joined the thousands of other North Carolinians who have dropped health insurance and joined a health cost-sharing group, Ohio-based Christian Healthcare Ministries, instead.

Nationally, these cost-sharing ministries claim more than a million people as members, with at least 33,000 members in North Carolina. And they’ve grown rapidly in the last few years. National membership has grown tenfold since 2011, and in North Carolina, membership numbers have roughly tripled in the last three years.

Cost-sharing ministries appear, at first glance, to be similar to health insurance. But the ministries take pains to point out that they’re not insurers, they don’t function in the same way and they aren’t regulated as insurers.

Gala and her family pay $450 a month and are responsible for the first $500 of cost for each health incident. But after that, eligible health expenses can be shared with other members.

The rules and exact procedures vary from one ministry to another, but typically they exclude pre-existing conditions and won’t pay for screenings, preventive services and prescriptions. Members must also agree with a set of Christian religious beliefs and follow religious strictures, such as not abusing alcohol or having sex outside of marriage.

Thanks to a provision in the ACA, members of these ministries are also exempt from the ACA penalty for not having health insurance. That penalty was eliminated in the massive tax overhaul Congress passed this month, but that change won’t take effect until 2019.

The Galas put the coverage to the test this fall when Christa’s husband, Jerry, had rotator cuff surgery on his shoulder. The procedure came with an estimated total price tag of about $20,000 to $25,000 after the couple told the surgery center they were paying out of pocket.

They filed their bills for the September surgery with Christian Healthcare Ministries, one of the country’s largest health care sharing ministries, and waited.

ACA-driven growth

Health care cost-sharing ministries have been around for decades, mostly in small Mennonite churches. The idea is simple and rooted in biblical ideas of helping others with their burdens: When a member has health care expenses they can’t afford on their own, they can “share” those expenses with others, who will help pay them.

Starting in the 1990s, though, larger ministries were established and started recruiting members outside their own denominations. Since the ACA went into effect, though, membership has exploded.

“When the mandate was passed folks started looking at every possible solution to be lawful,” said Joel Noble, vice president of the Alliance of Health Care Sharing Ministries, a 10-year-old trade organization that represents three of the largest cost-sharing ministries. “Health care sharing was just one of those.”

Michael Gardner, senior director of marketing and communications for Florida-based Christian Care Ministry, which operates Medi-Share, another large cost-sharing ministry, said about half of Medi-Share members are self-employed.

Medi-Share has more than 320,000 members across the United States and nearly 13,000 in North Carolina as of October. Medi-Share has grown very fast in the last few years, from 50,268 in January 2013 to 299,258 in July 2017 — a six-fold increase. Since its formation in 1993, Gardner said, the ministry has shared $1.3 billion in medical expenses.

“We’ve really had some serious needs in our membership in the past,” Gardner said, listing health conditions such as cancer and organ transplants. “I know of two individual needs, each that exceeded $1 million, that were shared by the members.”

Lightly regulated

But despite those success stories, Gardner and Noble are clear that cost-sharing ministries don’t provide the same benefits as health insurance and aren’t for everyone.

“We hear from members that, I think, are delighted about the fact that they call in with a question about a bill and after getting the help they need our folks here on the phone will offer to pray with them,” Gardner said.

Under the ACA, health insurance plans must cover pre-existing conditions as well as routine and preventive care. Those services often aren’t covered or have limited coverage in cost-sharing plans. And if something goes wrong, there’s little regulatory recourse.

Linzy Cook, a spokeswoman for the N.C. Department of Insurance, said her agency has not had any complaints about cost-sharing ministries, but they get a lot of calls from consumers asking about them. Their response is to explain some of the potential risks of being a member.

“The concerns we have about these organizations are that they are not regulated or licensed,” she said in an email. “Members pay into a fund, which may or may not be enough to cover each member. Once the money is gone, the organization may not be able to run, thus leaving thousands of people without insurance.”

The DOI doesn’t advise people on whether to join one of the groups, she said, “we simply tell them they need to be aware of the risks involved if they do decide to choose this option.”

And if a cost-sharing ministry member does have a complaint, the DOI can’t help much. North Carolina, like 29 other states, has a “safe harbor” law that excludes cost-sharing ministries from state insurance regulations. Likewise, there’s little regulation at the federal level, though the ACA does spell out several criteria cost-sharing ministries must meet to exempt their members from the ACA penalty for not having insurance.

Those rules require cost-sharing ministries to have an annual, independent audit and make it publicly available.

Potential side effects

Some who have studied cost-sharing ministries are concerned that these groups could further weaken insurance markets by luring relatively healthy consumers out of ACA exchanges.

“People who are likely to join the ministry may be healthier than the general population and have less complex health care needs,” said Rachel Sachs, a Washington University School of Law professor who focuses on health care related issues and who has written an academic book chapter about cost-sharing ministries. “That might mean that sicker people would be more likely to enter the [ACA] exchange.”

If the population covered under ACA plans is sicker than the general population, experts say that would drive up premiums in those ACA plans. Gardner, from Medi-Share, acknowledges those concerns, but says “we’re still a little fish. There are not that many people involved.”

He’s right. In North Carolina, more than 523,989 enrolled signed up for Affordable Care Act plans during the 2017 enrollment period — more than 10 times the number of people enrolled in health care cost-sharing ministries.

Though these cost-sharing ministries are not health insurance, they are seeking legislative parity with health insurance plans.

The Alliance of Health Care Sharing Ministries is lobbying for legislation that would allow health sharing ministry members to deduct their cost sharing payments the same way some self-employed people can deduct health insurance premiums, Noble said. There was also legislation introduced in the General Assembly last yearto create the same deduction for state income taxes, though it wasn’t passed.

The Alliance would also like ministry members to be able to open up health savings accounts. These accounts allow people to set aside tax-exempt dollars for health care expenses. Currently, they are only available to people who have high-deductible health plans.

Gardner said some of Medi-Share’s members have health insurance and use the cost-sharing ministry as a kind of back-up for high costs, but there’s no data on how widespread such arrangements are.

A better deal

In the second week of December, the Galas received $15,000 in reimbursements to cover costs related to the shoulder surgery. They had to carry the expenses on credit cards while they waited for the reimbursements to come through, but Gala said that was manageable thanks to their good credit.

There may be more reimbursements coming, as Gala has not submitted all of the bills related to physical therapy and expenses, but compared to an ACA plan with a $14,000 deductible, the cost-sharing ministry already seems like a better deal.

Having those reimbursements come through, Gala said, was a kind of “litmus test” for the sharing ministry. She’s aware of the risks that go along with the lightly regulated ministries. “My fear is how solvent are these companies,” she said. “As more and more people join them, are they going to remain solvent?”

But then she added, “for right now it’s the best option.”

Read more at Cost-sharing Ministries Becoming Popular Alternative to ACA Plans.