This was originally going to be an article for The Boyd Institute’s Health Care sprint. Unfortunately, they sensed the power level of my essay and closed the sprint early rather than go blind from its sheer brilliance. They made the right choice.
People have a natural inclination towards fairness, though nature cares not one whit about it. From this inclination stems their sense of justice, where a victim should not be punished for a malady he had no control over. As a corollary, bad behavior should not be bailed out at another’s expense. In rich societies, it’s a moral given that medical bills should not leave those who live a healthy lifestyle destitute. On the other hand, there is far less sympathy for a diabetic who refuses to lose weight. Citizens widely recognize the moral hazard of subsidizing destructive behaviour, and many refuse to make necessary changes until their situation becomes dire.
Health care is full of these situations. Some win the genetic lottery and live their whole lives with no need of health care services, often while living a lifestyle that would kill the average man. Others have health issues from the womb onward and need caregivers their entire lives. As a nation grows more prosperous, the people’s willingness to spend resources caring for both cohorts increases, though they are a net resource drain. This is right and proper, a sense of civic responsibility for the wellbeing of one’s neighbors. The sticky part is how to allocate such resources, and who is in charge.
A risk for any limited resource for public use is the tragedy of the commons, when a mass of people with no civic relations use the same system with no sense of shared ethics. This always devolves into every actor trying to extract as many resources as possible, long-term viability be damned. Someone is always footing the bill, but when the payer is abstracted away, there is little incentive to limit one’s resource use. Hence the problems of modern insurance.
There are countless proposed solutions to America’s health care woes. On the hard-line libertarian side, it’s argued that private charity is the best method. They assert, justly, that government involvement and forced taxation create mass graft and waste. There is no incentive to keep costs low. It exacerbates poor choices from those who waste health care resources through easily avoidable lifestyle changes. Single-payer advocates argue health care is a human right, full-stop, and should not depend on the fickle largesse of the public. They argue that religious groups and other ideological charities can’t be gatekeepers to health care, especially for those dependent through no fault of their own.
Both sides have legitimate concerns, and through decades of reform, the direction has always been for more health care, regardless of merit. Government choosing winners and losers is a non-starter for both factions. Sarah Palin famously talked of “death panels” that would give the government power over life-and-death decisions, saying:
Though I was called a liar for calling it like it is, many of these accusers finally saw that Obamacare did in fact create a panel of faceless bureaucrats who have the power to make life and death decisions about health care funding.
Those skeptical of government power are right to be ambivalent, yet without such power to choose winners and losers, there is little leverage to encourage good behavior, nor the ability to allocate limited resources based on merit. Obesity alone costs health care services over 170 billion dollars a year. Cigarette smoking costs 200 billion a year. Alcoholism costs 250 billion a year, etc. Substance abuse costs are similarly steep. This doesn’t even touch those who waste resources by not doing their physical therapy, taking prescribed medication, or by continuing destructive habits after costly surgeries.
Deductibles can curb some bad behavior, but they punish everyone. The chronically obese man’s doctor’s visit costs the same as a mom taking her kid to the same doctor. Both are stuck with a painful 150-dollar bill. There is no social contract that can restrain unhealthy lifestyles. High deductible plans do little when everyone wrestles with the same deductibles.
As costs spiral and families spend 20 thousand dollars a year for high-deductible insurance they never use, everyone knows the system is not tenable. Exorbitant prices for health care have created some innovative alternatives. Many wealthy philanthropists want to support needy families, but have difficulty finding a mechanism to do so without subsidizing procedures that conflict with their personal morality. Insurance alone isn’t doing the job.
Insurance aims to protect people from catastrophic losses they cannot reasonably absorb. Whether it’s a house burning down, an auto accident, or a debilitating injury that makes you unemployable, there needs to be a safety net for risks to livelihood. Determining where to place such a safety net is difficult, as some individuals can absorb a fifty-thousand-dollar bill while a ten-thousand-dollar bill will sink many. Given a life-saving surgery is not optional, you can’t just bow out. What insurance covers has steadily expanded, and so have costs.
What’s missing is a layer of protection that is not formal insurance. Insurance is ideally used only in catastrophic circumstances. However, this secondary layer must be more formal than the uncertainty of private charities. It should negotiate out-of-pocket pricing without dealing with a monstrous, inhuman bureaucracy, and be a more organic system based on relationships that brings both care and accountability to one’s health choices. Enter health-share services.
When the Affordable Care Act became law, many people, especially independent business owners, struggled under the steep price tag of health insurance. While health-share systems have existed since the ’80s, they have recently grown as a viable alternative, especially among religious types who had an aversion to high costs and objections to subsidizing immoral lifestyles. Now, these ministries are exploding.
Meanwhile, health care sharing ministries have seen their numbers soar, according to an estimate from the Alliance for Health Care Sharing Ministries. In 2014, when the Affordable Care Act, which recognized health care sharing ministries as an alternative form of insurance, fully went into effect, an estimated 160,000 people were enrolled in these programs nationwide. Today, as many as one million people have joined, says the alliance.
Such plans are not insurance. They pool money based on monthly fees and voluntary donations, usually only a few hundred dollars a month, and dole it out based on need. They are not beholden to requirements such as accepting pre-existing conditions, nor are they mandated to pay for every standard service. Most importantly, there is a set of expectations for every shareholder, and refusal to act within their code of conduct will result in no payment. For example, Samaritan Ministries has the following requirements for its members:
A. Be a professing Christian living by Biblical principles.
B. As a community of Christians helping other Christians with their medical bills, every adult on a membership must attend a Biblical, Christian church regularly (at least three out of four weeks per month that your health or weather permits).
C. Believe you are to bear one another’s burdens.
D. Agree to: not abuse any legal or prescribed substance, abstain totally from illegal drugs and recreational use of marijuana, and abstain from tobacco use (a rare celebratory cigar or pipe, e.g. when a baby is born, is allowed).
E. Limit consumption of alcohol to moderate amounts and never drink to drunkenness, or cause another brother or sister in Christ to stumble.
F. Abstain from any sexual activity outside of traditional Biblical marriage as designed by God between one biological man and one biological woman, which precludes rejecting one’s biological sex in any manner.
G. Agree to practice good health measures in accordance with the principle that your body is the temple of the Holy Spirit.
H. Keep your membership active by promptly sending your monthly assigned share to all regular needs assigned to you in your monthly newsletter mailing or eShare notification.
I. Agree that when you have a dispute with a fellow Christian, and your fellow Christian is willing to submit that dispute to fellow believers for resolution, you are not to sue each other in the civil courts or other government agencies.
J. Sign and send in your Membership Continuation Form each year, confirming that you are still meeting the above requirements.
K. Have someone to whom you are accountable (pastor, elder, church official, small group leader, accountability partner, etc.) sign a statement confirming that you meet the above requirements.
L. You will be required to agree to these requirements when you apply for membership and provide background information including your date of birth. Annually, you will need to reconfirm that you still meet these requirements.
While many of the requirements make sense from a coverage standpoint, such as moderate alcohol use, others, like church attendance, seem unrelated to health care, yet this is the glue that ensures it is not just health coverage in emergencies, but a shared ethic. Christian donors want to ensure their giving is for an aligned cause, and recipients need to feel a shared obligation to fellow travelers. While it might sound monstrous to not give coverage to a woman who got pregnant out of wedlock, these are necessary consequences. One must have a financial as well as spiritual incentive to be on the straight and narrow.
Not being an official insurance policy also creates leverage, as the companies can negotiate the cost of care. Instead of the doctor filling out insurance codes, there is price transparency about what they are charging and the exact services being administered. Opaque billing has frustrated patients for decades.
It also allows another layer of risk management. Many use the health-share system along with a high-deductible plan they are unlikely to reach, spending for two health plans but coming out ahead because of price negotiations and sharing costs for basic health needs. Others take a larger risk and forego traditional health care plans entirely, having confidence that whatever maladies befall them will be handled in good faith by the health-share, even without direct legal recourse.
Naysayers have plenty of complaints. These pools have no obligation to pay claims, even for items that are supposed to be covered. They lack monetary reserves for catastrophic years, and they will probably reject a massive injury because of the heavy costs. They also argue that people on such plans often forego insurance entirely. Critics also argue that people in these pools will probably be healthier, so the remaining people taking insurance will be less healthy by comparison, thereby raising premiums.
The debate misses the opportunity to remove many moral hazards associated with the current health care system and the ability of health-share plans to give local support to those with similar values, vastly increasing chances of mutual cooperation over a mass of strangers paying into the same system. With light federal oversight, the two systems could merge into something symbiotic. People could enroll in health-share plans for non-catastrophic expense and also enroll in an inexpensive catastrophic policy with a massive deductible as a last resort, whether the reason was a debilitating injury that became too expensive for the health-share or failing their morality clause.
Insurers can offer participants lower premiums because they have vetted the pool in the health-share to exclude many costly lifestyles that increase everyone’s health care expenses. Those who want to engage in risky lifestyles can do so, but they will have to pay for it. Those who are more pro-social are rewarded with lower costs, thereby creating incentives through social and financial pressure. Such health-share plans could be as small as a church congregation or as sprawling as a program that only requires basic health standards. Both will have their strengths, and both will create incentives for insurers to look into the books and notice the pro-social and pro-health habits they bring.
The worry of Sarah Palin’s “death panels” will be evaded, but the average person will be less on the hook for destructive behavior. Above all, it creates a sense of localism and shared responsibility that is sorely lacking in our increasingly atomized society. There is a more human touch in the relationship between patients, a sense of civic responsibility that makes one think twice about trying to milk the system for all it’s worth.
Will it be the perfect system? Of course not; none is. Yet such a symbiotic relationship is the closest to something that feels distinctly American, being neither so callous it abandons the most vulnerable nor as inhuman and bureaucratic as single-payer plans. If something needs to change, we should look at what is already working.
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