EDITORIAL |: Buyer Beware of “Health Exchange Ministries”

Opinion editor’s note. Editorials represents the opinion of the Star Tribune editorial board, which operates independently of the news outlet.

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Open enrollment is the window of time at the end of the year when consumers make important health care decisions; plan to purchase health insurance for the coming year to cover themselves and their families.

Those with coverage through employment usually have several plans to choose from. Those buying on their own, such as early retirees, farming families or entrepreneurs, have a dizzying array of choices. It’s the latter group, currently in open enrollment, who should heed recent data from Colorado that underscores an old truth:

If something sounds too good to be true, it probably is.

The information from Colorado state regulators concerns a product known as “health exchange ministries” that may be marketed to consumers who purchase a health plan. At the Health Exchange Ministry (HCSM), “members follow a common set of religious or ethical beliefs and make monthly payments to help pay other members’ eligible medical expenses,” according to the Commonwealth Fund, a nonpartisan health policy organization.

It sounds like health insurance. And for anyone on a budget, it probably sounds like a good deal, as monthly payments are often less, perhaps significantly, than monthly premiums for insurance sold through MNsure and other trusted marketplaces.

But the National Association of Insurance Commissioners has long warned that health department plans are “not insurance.” Consumer protections under the Affordable Care Act do not apply, and in some states, ministries can fall between the regulatory cracks.

That could mean big problems. “HCSMs have no obligation to pay member claims,” ​​the Commonwealth said in a new warning last week. Coverage for pre-existing conditions such as cancer, diabetes or asthma may be excluded. So can other needs, such as preventive care or mental health treatment. In contrast, traditional medical plans “must cover basic health benefits and all pre-existing conditions.”

The regulatory gray area in which HCSMs operate has provided little visibility into their operations. But in 2022, Colorado lawmakers passed an ordinance requiring the state to collect data on them. Since then, state regulators have submitted a biannual report. Open enrollment is a smart time to highlight findings.

• In 2021, nearly 68,000 Colorado residents were enrolled in HCSM. That’s about 30% of people who bought insurance on their own in the state that year, an alarming number.
• Annual medical claims far exceeded the amount paid by HCSMs; $362 million in medical claims were filed, while $97 million in fees were collected, enough to cover 28% of members’ medical expenses. HCSMs contend that the $362 million includes duplicate and impermissible charges and does not reflect rebates or discounts members have agreed to pay. But even when this amount is adjusted to reflect, the amount collected by HCSMs covers only 74% of total eligible share requests. Translation: Members are at risk for significant medical expenses.
• Many HCSMs reported excluding important types of medical claims, such as mental health and alcohol use disorders, ADHD treatment, birth control, or prescription drugs for chronic conditions. In addition, some excluded or limited maternity care if the pregnant woman did not belong to a certain membership level (probably more expensive) for the required time.
• Members of some HCSMs had to apply to clinics or hospitals to prescribe or discount medical care, or to request charitable assistance or government assistance before the organization would pay the bill.

A recent Commonwealth analysis of Colorado data adds an additional troubling perspective. One HCSM recently surveyed members and found that 42% had incomes below 200% of the federal poverty guidelines. That means they could probably qualify for Medicaid programs or financial subsidies from the Affordable Care Act. Or can provide low-cost or no-cost coverage with no benefit gaps.

There are HCSMs in Minnesota. On Monday, the state Department of Commerce advised “consumers looking for affordable insurance options to explore legitimate plans available through MNsure.” Officials also noted that the agency “has the ability to take enforcement action if an unlicensed entity engages in insurance business.”

As always, consumers should be vigilant during open enrollment, which began on November 1 and runs through January 15. Minnesotans are also welcome to submit complaints to Commerce about insurance or insurance-like products. They can file a complaint online, by email at customers.protection@state.mn.us or by calling 651-539-1600.