Best's Review



Regulation: Health Care Sharing
An Alternative Approach

Health care sharing groups operate outside of the norms of mainstream health insurance. Some say it’s time to regulate them.
  • Lee McDonald
  • February 2020
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State insurance legislators and regulators should set standards for networks in which religious and affinity groups support members' medical costs by operating outside of traditional insurance structures, said Kevin McBride, owner and manager of Washington, D.C.-based McBride Law.

McBride spoke with AMBestTV at the annual conference of the National Council of Insurance Legislators, held in Austin, Texas.

Following is an edited transcript of the interview.

Kevin McBride, McBride LawAs it currently exists, basically health care sharing is not regulated with any common set of standards. It’s sort of a haphazard, ad hoc approach that is taken very differently from state-to-state.

Kevin McBride
McBride Law

What is the concept of health care sharing?

Health care sharing is a concept by which members of a group that either share common religious beliefs or share common ethical beliefs, either/or, share their health care expenses on a voluntary basis.

It is sometimes referred to as a replacement for health insurance, it's more complicated than that. It is often bought in lieu of actual health care insurance.

Are they actually health insurance organizations and are they regulated?

No, they're not health insurance organizations.There are safe harbor protections in 30 different states, but there is no formal regulation of health care sharing entities as of yet.

In fact, the NCOIL is looking at a proposed model act that could be adopted by all the states which would, in fact, regulate health care sharing entities and require registration and formal regulation at the state level. Which, by the way, my client, Shareable a technology provider, supports. We provide the backend services by which health care sharing is actually facilitated. We offer those services to other health care sharing organizations who deal directly with customers and bring in members.

You're here at NCOIL, obviously talking about regulation and consumer protection, as well?

Yes. There's a model act that's being proposed by NCOIL. It covers a variety of areas, including consumer protections. One is consumer anti-fraud. We're all in favor of that. We support that in a clear-cut way.

We also have proposed with our suggested edits to the model act additional consumer protections, which make sure that certain disclosures are given to members of health care sharing groups.

For example, health care sharing groups should know exactly where money went on a monthly basis, who made claims for health care assistance, who paid monies to support health care assistance, how much was spent in administrative costs. All of that should be very transparent to every member of a health care sharing organization.

We are championing that agenda plus some additional consumer protections.

What about the issue of financial strength? Do they have to meet any standards? Are they regulated in any way as far as their capital?

There is no capital regulation at the current time. That's a topic that's being discussed here at the committees. The way things currently stand is members contribute certain amounts on a monthly basis to a health care sharing entity. That is held in reserve.

Whatever amount is held by the entity is then available and used for health care sharing. If there is not adequate money for a particular claim, for example for a month, then the money that is available is shared. It's essentially paid out of actual proceeds as available.

Are there any states that already have any kind of laws or regulations that govern these?

There are 30 states that actually have what are called safe harbor provisions for health care sharing entities. They pretty much vary. There is no standard model act. I think that this model act is essentially going to replace the safe harbor provisions.

Safe harbor, as a name, implies at the common sense level. It means that as long as you do certain things, A, B, C, and D, you can operate as health care sharing inside our state. There are 30 states that currently have those safe harbor provisions, but there is really no model that's uniformly applicable across the states.

This model act essentially would purport to replace the safe harbor acts that are currently in existence and provide more actually direct oversight of health care sharing entities at a state level that is agreed to by all the stakeholders so that we register and we interact with the regulators. That's what the proposal is on the table.

As it currently exists, basically health care sharing is not regulated with any common set of standards. It's sort of a haphazard, ad hoc approach that is taken very differently from state-to-state.

Our goal is to make sure that health care sharing is transparent, and clear, and that it's there for the benefit of the members. It's not there to enrich a handful of people, which can happen if it's not done properly.

Currently, the proposal, the model act on the table, would integrate a federal standard that was an exemption to the individual mandate under the Affordable Care Act.

Under that exemption, as is currently written in federal law, only health care sharing entities that have been actively in existence since 1999 would be allowed to register under the model act. We don't like that.

The reason we don't like it is the only entities that have been in existence since 1999 are essentially a handful of traditional Mennonite groups, which have operated the same way for a hundred years, at least, and a small handful of conservative Christian groups.

That's great. They should be able to do health care sharing. We believe that there are other groups, and we know that there are other groups because we're in contact with them that want this type of coverage. We're in contact with a Jewish group in New York, for example, who would like to do health care sharing on the basis of their Jewish faith.

We're in touch with a group of gay rights advocates who would like to do health care sharing based on the unique needs of the gay community. They are currently locked out of participation because they're not conservative Christians.

A big push of what my client is trying to accomplish is to essentially allow regulators to expand the definition of who can participate in health care sharing to include other discrete groups, not just open the door crazy wild to everyone, but open it up to groups who share a common set of ethical beliefs.

Not just religious beliefs, but also ethical beliefs, so that gay rights groups can do health care sharing, Jewish groups, Muslim groups can do health care sharing because, as it's written right now, if we require the 1999 in existence requirement, the only groups that could do health care sharing are the existing conservative Christian groups.

Our group is trying to expand it more broadly in an incremental basis with supervision of state regulators. That's our goal.



Lee McDonald is a group vice president, AM Best Co. He can be reached at

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