When Jason Morris' son Cole was two years old, he broke his thighbone and spent several weeks in a full-body cast. The medical bills came to about $13,000, but Morris, his wife, and six children don't have health insurance. Instead they belong to Samaritan Ministries, an organization of devout Christians who chip in to cover each other's medical bills. Following the usual process at Samaritan, members from all over the country mailed the Morris family small checks that added up to enough money to cover all the bills. "We had the emotional side of it," says Morris, "but the financial side of it was completely taken care of."
Samaritan has about 86,000 members spread among all 50 states, which makes it the largest of three "health care sharing ministries" in the U.S. Households of three or more are required to send $370 each month to another family to help cover the bills from a medical crisis. Headquartered in Peoria, Illinois, where 94 staffers coordinate the bill-sharing process, the organization is based on the belief that patients are ultimately responsible for their own medical bills. But in times of crisis, the community bands together to pitch in and help bear the burden. "Faith in God applied to health care," is one of the organization's mottos.
Samaritan may soon become a casualty of new incentives created by Obamacare, which does virtually nothing to reduce third-party payments in delivering health care. When their bills are mostly covered by insurance companies or the government—which may also be heavily subsidizing their premiums as well—patients aren't discerning shoppers.
Under Obamacare, most Samaritan members will be able to purchase health insurance policies that offer richer benefits for lower prices, thanks to significant taxpayer subsidies. Take, for example, the median Samaritan household, which has three members and an annual income of about $40,000. Under Obamacare, that family will pay around $2,500 dollars a year to buy a middle-of-the-road "silver" plan on the new health care exchanges. Why so cheap? Because taxpayers will pick up two-thirds of the total cost of the insurance premium. Compare that $2,500 price tag to the cost of an annual membership in Samaritan, which comes to $4,440, and that average family will save nearly $2,000 per year for quitting Samaritan and signing up for a subsidized insurance plan that's more comprehensive. About 90 percent of Samaritan members have incomes low enough that they'll qualify for at least some federal subsidies on the exchanges. Depending on a variety of factors, households making up to 400 percent of the poverty line may qualify for premium subsidies.
Samaritan's executive vice president, James Lansberry, is optimistic that most Samaritan members will stick with the ministry because of its theological mission. He’s also convinced that the biggest threat from Obamacare is already out of the way. Lansberry led a successful fight to get language inserted into the law that specifically exempts health care sharing ministries from the individual mandate, which would have required that members buy a traditional health insurance policy or pay significant penalties. "We look at our exemption from the individual mandate as a miracle from God," he says. Regarding the exchanges, "members will stick with us even if it doesn't make financial sense, because by belonging they're expressing their religious beliefs.”
Lansberry points out that many members care deeply about what Samaritan doesn't cover. "Do you support abortion, sexual immorality, drug & alcohol abuse with your health insurance?" reads the cover of one Samaritan pamphlet. Joining with "unbelievers" to cover the "health consequences of sinful living," it warns, "is not a way of showing the love of Jesus Christ."
But even if the vast majority of Samaritan members stick with the organization, it can be damaged by even marginal declines in its membership rolls. Samaritan merely administers the bill sharing and it doesn't directly collect money or set aside extra funds on good months. So in order to function at its best, each month membership dues have to equal or exceed the total cost of all qualifying medical bills. Otherwise Samaritan has to pro-rate its payout, which leaves patients to cover a larger portion of their own bills out of pocket. The larger the pool of members, the more predictable their monthly medical needs will be in the aggregate, making it possible for Samaritan to calibrate accurately its membership dues with monthly needs. If the membership pool shrinks, there could be more pro-rating, which will create more dissatisfaction among members, making them more likely to defect—a process that could feed on itself.
It would hardly be the first time that a new government entitlement destroyed a voluntary organization built around commonly held beliefs. Samaritan is one of the last “mutual aid societies,” organizations that up to the early twentieth century played an integral role in American life. In 1910, an estimated one-third of American men belonged to a fraternal organization, which provided temporary help to those unlucky enough to fall ill or lose a job. The mutual aid societies began disappearing with the rise of government programs such as welfare, Medicaid, food stamps, and unemployment insurance.
The demise of Samaritan and other outfits like it would be cause for concern. Subsidized health insurance plans through the exchanges provide richer benefits than a membership in Samaritan, but they do away with incentives that over time are the key to driving down prices and driving up quality. With the "silver plan" on the health care exchanges, when patients get a routine physical they're responsible for no more than $45 out of pocket and insurance pays the rest. Samaritan members pay the entire cost of a routine visit out of pocket and they can only submit their bills for reimbursement that exceed $300.
"Absolutely we hold out longer than somebody who has an insurance plan with a $5 co-pay because we know it's going to cost us," says Jason Morris, who works as a pastor at New Life Christian Church in East Peoria, Illinois, but previously spent 10 years as an employee at Samaritan. "I don't really see holding out as a problem. I hope it's not too crass to compare it to a sale at Menards—you don't buy the item when it's up front for $140, you buy it when it's on sale for $100."
Through the health plans available on the exchanges, patients can get a whole range of routine preventive services, including mammograms, colonoscopies, vaccines, and blood tests, and pay nothing out of pocket. When Samaritan members get these same procedures, they have to pay the entire bill themselves unless they're directly related to an existing illness or condition.
“Now if you're a doctor and you know the patient that you have to look in the eye will never have to pay a single penny of the cost of these procedures," says Samaritan's Lansberry, "you're going to try and raise your price because there's no reason not to." Samaritan members actually care about what things cost because every dollar comes out of their own pocket or the pockets of their fellow members. "If my best friend gives me his credit card and says go out to dinner on me," says Lansberry, "I'm probably not going to have surf and turf because I want to look him in the eye later."
Take Roger Stuber, a Samaritan member and residential contractor in Tremont, Illinois. He experienced a series of seizures last year that revealed a leaky vein in his brain that required surgery. Even in the midst of this terrifying episode, Stuber went to lengths to insure that he wasn't overcharged. The hospital initially was going to bill him more than $63,000 for his surgery, which he negotiated down to just over $36,000. When he was billed $5,000 for a follow-up MRI, at first the hospital refused to offer him much of a discount. So he marched down to the finance office and demanded to see the manager in charge. She eventually agreed to accept just under $1,500 dollars if Stuber paid cash on the spot.
If he hadn’t gone to all of this effort, the bills would have been covered almost entirely by other members. "But I'm part of a body there at Samaritan," says Stuber, "and if I can keep costs down, I'm helping the group."
It's the sort of effort that no patient covered by one of the Obamacare's health plans would ever bother with. Whatever the fate of Samaritan Ministries, the growing role of government in the sector is eroding the power of individuals to make health care cheaper and better.