When his wife spent a week in Georgetown University Hospital's intensive care unit last year recovering from life-saving brain surgery, Joe Huff never worried about who would pay her $120,000 hospital bill, even though his family has no health insurance.
Huff, a 52-year-old Laytonsville real estate agent, said he trusted that a bill-sharing cooperative of evangelical Christians he joined 10 years ago -- and to which he faithfully mailed a $346 monthly check -- would come through, just as it had when the youngest of the couple's seven children was hospitalized with spinal meningitis two years ago.
After a $250 deductible, Huff said, Christian Care Medi-Share paid for everything. "We also got about 20 cards and letters from people saying they were praying for us," he added.
Huff and his family are among the 60,000 members of Medi-Share, the largest of a little-known group of nonprofit organizations that market themselves as faith-based alternatives to health insurance. The half-dozen plans, which claim a total membership of more than 120,000 Americans, are especially popular in the South.
The appeal of these "church plans," as they are known in the insurance industry, is both economic and religious. Because their monthly cost is roughly half that of conventional health insurance premiums, they appeal to those who find medical insurance difficult or impossible to afford. And because their membership is strictly limited to evangelical Christians certified as regular churchgoers by their pastors, they cater to people opposed to "subsidizing high-risk, sinful lifestyles," in the words of Medi-Share's Web site.
"A nonbeliever doesn't have an obligation to follow through" by sending a check each month, said James K. Lansberry, executive vice president of the 35,000-member Samaritan Ministries International of Peoria, Ill.
All three of the largest plans -- Medi-Share, Samaritan and the Christian Brotherhood Newsletter, headquartered in Barberton, Ohio -- impose strict limits on treatment, restrictions that would be illegal under regulations that apply to conventional insurance.
Tobacco use, immoderate drinking, homosexuality and extramarital sex are strictly forbidden, and anyone caught violating these proscriptions can be expelled. The plans don't pay for abortion, or treatment of sexually transmitted diseases or HIV that was not, as Samaritan puts it, "contracted innocently." While each plan's rules differ, most exclude coverage of preexisting conditions, as well as treatment related to cancer recurrence, serious heart disease, obesity, psychiatric disorders or vision problems.
"Our [members'] greatest sin is racing down to the buffet after the sermon," quipped E. John Reinhold, a former insurance executive who is the founding chairman of Medi-Share, a subsidiary of the American Evangelistic Association, based in Melbourne, Fla.
Although church plans differ, their basic premise is simple: Members send a monthly check -- a "share" -- ranging from $200 to $400, either to the plan or directly to those the plan designates with "needs," as medical bills are known. They also agree to send cards and letters or to pray for those in need; in some cases the names and addresses of those in need, along with a brief description of their medical problems, are published in a monthly newsletter.
While Medi-Share has many of the characteristics of insurance -- including annual deductibles, a medical advisory board, the practice of negotiating discounts from hospitals and a requirement that non-emergency treatment be approved -- Reinhold insists it is not insurance and therefore is exempt from state regulation.
Medi-Share, he said, is a voluntary arrangement between like-minded people to share medical expenses according to rules they devise, in fulfillment of the New Testament exhortation that Christians should bear each other's burdens.
"There are no reserves and there is no guarantee a need will be paid," Reinhold said. Insurance, he added, requires a contractual transfer of risk in exchange for payment.
Critics disagree. They say Medi-Share and other church plans are essentially unlicensed health insurers operating without regulation, protection for unsuspecting consumers or public accountability. Consumers, they say, may not understand what is not covered, know that they are surrendering their medical privacy or that they could be stuck with huge medical bills.
"These plans function just like health insurance, but they operate in a regulatory black hole," said Mila Kofman, an assistant research professor at Georgetown University's Health Policy Institute. "There is no accountability, no oversight, and the people who participate have no protection." Unlike insurance companies, which are required to have reserve funds to pay claims, church plans do not maintain reserves.
State regulators, Kofman and others say, have been slow to take action because they are leery of the plans' religious affiliations and because complaints by subscribers have been uncommon.
Christian Brotherhood Newsletter did run afoul of Ohio authorities after complaints about unpaid claims; it is operating under a court-ordered receivership imposed in 2000. Last year a jury in Akron ruled that its founder, Rev. Bruce Hawthorn, and other former officials defrauded the ministry and ordered them to repay nearly $15 million they spent on luxury houses, motorcycles, expensive cars and high salaries, including one for a stripper whom Hawthorn said in an interview he was "trying to help."
"Insurance companies have to file financial reports to regulators every year -- these plans don't," Kofman said. "Who knows how much money they're taking in or paying out? I think they're taking advantage of religious people who are desperate" because they can't afford other health coverage.
Officials of all three plans insist that they are scrupulous about handling members' money.
Each plan essentially tallies medical claims each month, then divides by the number of members, officials say. After subtracting for overhead and administrative expenses, the rest goes to pay claims. In Medi-Share's case, 18 to 22 percent of annual revenue is earmarked for administrative expenses, including salaries, Reinhold said. Last year, according to its annual audit, Medi-Share paid nearly $43 million in medical bills, up from $37 million in 2004. In its 12-year existence Medi-Share has paid out about $200 million in medical bills, according to Reinhold.
While many states have investigated church plans in the past 15 years, few have taken action against them, according to the National Association of Insurance Commissioners. In a few states, including Maryland and Wisconsin, where regulators temporarily suspended the operations of Christian Brotherhood Newsletter, state legislators subsequently stepped in, passing specific regulatory exemptions that allowed the plan to do business.
Kentucky officials have taken a different approach. Regulators there are embroiled in a long-running legal battle with Medi-Share. In 2002 the state obtained a restraining order to halt the sale of Medi-Share memberships, which it said was unauthorized insurance. The order was subsequently overturned, but the two sides are still in court.
Last January, state insurance commissioner Glenn Jennings issued a "consumer alert" warning Kentucky residents that church plans do not give consumers the protections of health insurance. "We take very seriously our job of protecting consumers," he said.
Although Jennings said there had been complaints about Medi-Share in Kentucky, they are rare elsewhere. One reason may be the threat of exclusion. Nearly 95 percent of Medi-Share members last year voted to immediately drop members who "choose to ignore the finality of the three Christian doctor appeal" and who pursue arbitration or "use the secular courts" to settle disputes.
Affordable, in a way
Matthew Gregory, the 33-year-old pastor of the Soul Purpose Church in Fauquier County, said his family has never had health insurance. They couldn't afford a Blue Cross policy offered through a Southern Baptist group that would have cost $500 per month to cover Gregory, his wife, and their three young sons. The family's annual income is about $40,000. Instead, Gregory pays $225 each month to Samaritan.
"Many of our members would qualify for Medicaid but are not using it" because they joined Samaritan instead, said Lansberry, the plan's vice president. "We're providing a public service."
At least four times in the past 10 years, Gregory said, his family has sought help paying bills that exceeded $300 -- the plan's minimum allowable claim. The most recent incident occurred last year when his youngest child, then 4, suffered complications from the West Nile virus and spent nearly two months at the University of Virginia Medical Center in Charlottesville.
At that time the Gregorys received more than 100 checks from fellow members to pay the hospital bill, as well as cards and notes. "It's definitely a very warm system compared to the paperwork and the wrangling I've heard about from regular health insurance," said Gregory, who moonlights as a salesman.
While some people might find keeping track of dozens or even hundreds of checks onerous -- assuming payments of $225 from fellow members, someone with a $100,000 claim would receive 444 checks -- that hasn't happened, according to Lansberry.
"I've never heard of anyone complaining," he said. "The joy of the global community of Christians far surpasses the administrative need. This feels like a community, like an Amish barn-building."
For Gregory, financial considerations were the reason he joined. But religious factors have become equally important.
"It's nice to be partnered up with other people who have similar values and don't make the lifestyle choices that would make our costs go up," he said. Such choices, in Gregory's view, include "people in nontraditional family situations. There's more illness in those."
Not an insurance card
Because of the two- to three-month delay in paying claims, most plans advise members to set up an installment plan with a doctor or hospital. Medi-Share issues wallet-sized cards to its members that they can present at the time of treatment.
Robert "Chip" Ward, a Medi-Share member who lives in Montgomery County and is the father of seven, said he has never been questioned.
"It looks like an insurance card and when I present it, I say, 'This is my medical provider,' I don't say it's insurance," he said. "But I've never been asked about it."
Carna Reitz said she routinely explains Samaritan to new doctors who treat her family, which includes five children.
Her husband, a building contractor in Fauquier County, was recently diagnosed with acute leukemia and has spent the past month in Prince William Hospital undergoing intensive chemotherapy. Reitz said she has told hospital officials that the family belongs to a medical sharing group that will pay the bill, an explanation they have accepted.
"We really don't feel like his treatment has been limited," she said. "I guess this will be the biggest test." Samaritan covers treatment for cancer that is unrelated to a preexisting condition.
Reitz said she hopes his bill will not exceed Samaritan's maximum of $100,000 per incident. If it does, she said, they will seek help through another Samaritan account to which they have contributed, which is supposed to provide additional coverage.
One way Medi-Share controls costs is by requiring its members to seek approval by telephone before non-emergency treatment, or pay $250 to the plan. Callers are routed to a medical panel headed by John E. Evans, a retired orthopedic surgeon from Vicksburg, Miss., who also sits on Medi-Share's 55-member board of overseers.
"Members are asked to give us the information we need to determine whether care will be covered, Evans said. The goal, he said, is to steer subscribers to the most appropriate treatments.
In some cases Evans's suggestions, published in Medi-Share newsletters, have been unconventional and do not include medications or surgery.
Recently he suggested that Larry McFall, a middle-aged runner with a torn meniscus, do stretching exercises to avoid surgery recommended by an orthopedic surgeon. McFall wrote that the treatment worked and noted that the advice "saved the $6,000 cost of my surgery and physical therapy" and spared him "possible infection and other side effects of surgery."
In another case, Evans advised 62-year-old Marianne Petersson, who has high cholesterol and had been hospitalized after a series of mini-strokes, to adopt a dietary regimen that included a water-only fast for three days, followed by 11 days of a water-and-fruit diet.
Evans, who does not have a Florida medical license, said he is not practicing medicine by dispensing such advice. He likens it to what he would tell "someone who stops me at church and asks me what to do."
Evans, 71, declined to disclose his Medi-Share salary except to say, "I'm paid significantly less than I would ordinarily be paid." He said he is not enrolled in Medi-Share, but has health insurance coverage through Medicare and the American Medical Association.
Plans behaving badly
Officials of the three major church plans say they have installed financial controls, including independent audits, to prevent the kind of fraud that engulfed the Christian Brotherhood Newsletter, the oldest of the plans.
Sherry Phillips, a lawyer in the Ohio attorney general's office, said authorities are still trying to collect the nearly $15 million awarded by the jury last year from the sale of foreclosed properties once owned by Hawthorn and other ousted officials. The newsletter's new management team, she said, has been whittling down unpaid claims; about $2 million remain.
Rev. Howard S. Russell, the newsletter's new executive director, described its standards as "impeccably aboveboard" and said the group is anxious to rebuild. The newsletter, he said, is now governed by an independent board of trustees and a strict conflict of interest policy is in place.
"In the last 10 years alone, even with the troubles, we have paid $400 million in medical bills," he said. Our "problems are in the past. It is a new day at the ministry."