04/02/2015 01:30 PM Senate LABOR & COMMERCE

        SB  18-HEALTH CARE SHARE MINISTRY NOT INSURANCE                                                                     
                                                                                                                                
2:09:43 PM                                                                                                                    
CHAIR  COSTELLO announced  the consideration  of  SB 18. "An  Act                                                             
exempting a  health care sharing  ministry from regulation  as an                                                               
insurer." She noted this was the first hearing.                                                                                 
                                                                                                                                
2:10:05 PM                                                                                                                    
JORDAN SHILLING,  Staff, Senator John  Coghill stated that  SB 18                                                               
has  two  main  purposes:  1)   to  define  health  care  sharing                                                               
ministries and 2) to exempt  them from insurance statutes because                                                               
they  are  charitable organizations.  Health  care  sharing is  a                                                               
payment  arrangement for  health  care among  persons of  similar                                                               
beliefs. It is administered by a nonprofit corporation.                                                                         
                                                                                                                                
He  noted  the three  largest  sharing  ministries are  Christian                                                               
Health   Care  Ministries,   which  was   established  in   1990,                                                               
MediShare,  established   in  1993,  and   Samaritan  Ministries,                                                               
established  in 1994.  All three  are biblically  based and  have                                                               
membership  requirements, such  as living  a Christian  lifestyle                                                               
and abstaining from tobacco.                                                                                                    
                                                                                                                                
MR.  SHILLING  continued  to explain  that  health  care  sharing                                                               
ministries  are different  from regular  insurance. Insurance  is                                                               
the transfer of  risk from one entity to another  in exchange for                                                               
a guaranteed  payment. The sharing ministries  are 501(c)(3)s and                                                               
no member is required by law  to pay anyone's medical bills. They                                                               
don't assume or  transfer risk, pool money or  use actuaries, and                                                               
they don't  purchase reinsurance  policies. They  are a  group of                                                               
people who come together voluntarily and agree to share costs.                                                                  
                                                                                                                                
He stated that  most states do not consider  sharing ministries a                                                               
form of  insurance, including the  Alaska Division  of Insurance.                                                               
There are  about 3,400 Alaskans  in sharing ministries.  He noted                                                               
30 states  have passed laws similar  to SB 18. If  the state were                                                               
to  regulate these  sharing  ministries  as insurance  companies,                                                               
they would likely cease to exist.                                                                                               
                                                                                                                                
SENATOR MEYER  asked Ms. Wing-Heier  her opinion of the  bill and                                                               
what it attempts to do from an insurance perspective.                                                                           
                                                                                                                                
2:13:57 PM                                                                                                                    
LORI WING-HEIER,  Director, Division of Insurance,  Department of                                                               
Commerce, Community  and Economic  Development (DCCED),  said the                                                               
decision to  join a  health care sharing  ministry is  a personal                                                               
commitment by an individual who  trusts an organization to assume                                                               
the  responsibility  to  pay their  medical  bills.  About  3,500                                                               
people participate  in health care sharing  ministries in Alaska.                                                               
She explained  that sharing ministries were  specifically carved-                                                               
out of  the Affordable  Care Act  (ACA) as long  as they  were in                                                               
existence in 1999. The bill codifies  that this is ongoing in the                                                               
state and that previous administrations  have not taken exception                                                               
to it.                                                                                                                          
                                                                                                                                
CHAIR  COSTELLO asked  for  an explanation  of  the DCCED  fiscal                                                               
note.                                                                                                                           
                                                                                                                                
2:16:30 PM                                                                                                                    
MS. WING-HEIER  said the Division  of Insurance submitted  a zero                                                               
fiscal note  because the bill  maintains the status quo.  It will                                                               
not  impact  the  current  organization   or  work  load  of  the                                                               
division;  health care  ministries  are not  taxed currently  and                                                               
won't be in the future.                                                                                                         
                                                                                                                                
SENATOR MEYER asked how a group qualifies for this exemption.                                                                   
                                                                                                                                
MS. WING-HEIER replied the organization  is set up as a 501(c)(3)                                                               
nonprofit. She deferred further explanation to the sponsor.                                                                     
                                                                                                                                
2:18:11 PM                                                                                                                    
JOEL  NOBLE,  Alliance  of Health  Care  Sharing  Ministries  and                                                               
Samaritan Ministries, explained that this  is one of the accepted                                                               
exemptions  within  the  Affordable   Care  Act  for  not  having                                                               
individual insurance.  Some of  the qualifying  standards include                                                               
being  in existence  before December  31, 1999  and providing  an                                                               
annual audit upon request.                                                                                                      
                                                                                                                                
SENATOR MEYER asked the significance of the 1999 date.                                                                          
                                                                                                                                
MR.  NOBLE  surmised  that  it  was to  keep  false  actors  from                                                               
starting for  the sake of  getting out from under  the individual                                                               
mandate of the AFA. The date  was set based on the starting dates                                                               
of  the three  national ministries.  About 50  Mennonite churches                                                               
also qualify.                                                                                                                   
                                                                                                                                
SENATOR  MEYER   continued  to  question   the  date   since  the                                                               
Affordable Care Act passed in 2010.                                                                                             
                                                                                                                                
MR. NOBLE  said the date came  from the U.S. Senate  Committee on                                                               
Finance and he wasn't sure what the thinking was.                                                                               
                                                                                                                                
CHAIR COSTELLO asked how health care sharing ministries work.                                                                   
                                                                                                                                
MR.  NOBLE  explained  that  they  are  member-to-member  sharing                                                               
entities based on the Amish  model of community help, but applied                                                               
to medical needs. He used  his membership in Samaritan Ministries                                                               
as an  example. Each month  the ministry newsletter  includes the                                                               
name  and address  of a  member  along with  their medical  need.                                                               
Depending on the need, other  members are assigned the same name.                                                               
He and the  other members each send a check  to the injured party                                                               
that  is equivalent  to  the monthly  cost  of membership.  Those                                                               
checks total  the amount of the  bill and the injured  party uses                                                               
them to  pay their medical costs.  He also related that  when his                                                               
kids  were born,  he received  a number  of checks  from ministry                                                               
members and he cashed them to pay the hospital and doctors.                                                                     
                                                                                                                                
2:23:04 PM                                                                                                                    
JENNIFER  MEYHOFF,  Alaska  Association  of  Health  Underwriters                                                               
(AHU), said  this professional  organization represents  over 100                                                               
licensed  health  insurance  brokers,  agents,  consultants,  and                                                               
benefits  specialists.   They  help  individuals   and  employers                                                               
purchase,  administer  and  utilize their  individual  and  group                                                               
health  insurance  coverage.  She  said  AHU  is  concerned  with                                                               
consumer  protection  and  integrity   of  the  health  care  and                                                               
insurance markets  in Alaska.  As such, the  lack of  Division of                                                               
Insurance  oversight  of  the  exemption  under  SB  18  is  very                                                               
troubling. AHU  understands that  this is  not insurance,  but it                                                               
looks and feels like insurance  to the 3,500 consumers in Alaska.                                                               
She questioned  what would happen  in the  event of a  $1 million                                                               
claim or a  prescription drug need in excess of  $30 thousand per                                                               
month.  The  bill  doesn't  address   this  and  other  important                                                               
consumer  protections, which  is  why the  Alaska Association  of                                                               
Health Underwriters opposes SB 18.                                                                                              
                                                                                                                                
2:26:37 PM                                                                                                                    
SENATOR COSTELLO closed public testimony and held SB 18 in                                                                      
committee for further consideration.