Well, we almost did it.

Back in 2019, the Vermont Legislature adopted a bill imposing penalties on those who didn’t have health insurance. But the bill included an exemption for those enrolled in so-called health care sharing ministries instead of actual health insurance. That same year, the Scott administration and the Attorney General’s Office issued a consumer warning about the perils of choosing an HCSM over insurance.

Now it’s 2023, and there are almost certainly more Vermonters in HCSMs now than there were four years ago. (HCSM participation grew dramatically during the Covid pandemic as many lost their insurance coverage due to unemployment, and were desperate for any cheaper option.) And we haven’t done much about it at all.

This issue came to my attention when I was writing up former health care reform opponent and former Trump administration appointee Darcie Johnston’s employment with the Alliance of Health Care Sharing Ministries. I didn’t include Vermont’s own sad little history because (1) I needed to do more research and (2) I do try to keep these posts from getting painfully long. But now it’s time to tell Vermont’s part of the story.

A bit of background. HCSMs do not provide insurance. They are faith-based associations, almost exclusively Christian, of people who pay into a common fund that, theoretically, covers enrollees’ health care costs. They often market themselves as alternatives to insurance, which technically they are, but they’re a terrible alternative. HCSMs do not guarantee payment of medical bills. They can limit total payouts for individual enrollees, refuse to cover pre-existing conditions, and enforce lifestyle agreements that bar extramarital sex, homosexuality, alcohol, tobacco, and the like. They routinely deny coverage for “lifestyle-related” illnesses such as lung or liver disease, STDs, obesity and diabetes. In one case, a woman viciously beaten outside a bar was denied coverage for her injuries because, I guess, the attack was too close to a sinful establishment?

HCSMs have been around for a while, but got a big boost thanks to a loophole in the Affordable Care Act that exempted HCSM enrollees from paying penalties for not having health insurance. And also thanks to the rising tide of conservative anger at anything to do with President Obama and the Democrats. That tide continued to rise during the Trump years and the pandemic.

So, Vermont, and the 2019 passage of H. 524. In its original form, HCSM participants would have had to pay penalties for not carrying health insurance because, you know, HCSMs are not health insurance. Former state representative Bill Lippert, who then chaired the House Health Care Committee, recalls that the original bill did not exempt HCSMs. “If you look at what they’re offering, they sidestep a lot of protections in state law,” he said. “They will only reimburse for things consistent with ‘Biblical living’… I found it egregious and offensive.”

But late in the process, after a lobbying push from HCSMs and clients, an HCSM exemption was inserted into the bill, which became state law as Act 63.

At the time, lawmakers asked the Attorney General and the state Department of Financial Regulation to look into HCSMs for possible enforcement action. In July 2019, DFR issued a “cease and desist” order against several operators for deceptive marketing practices that wrongly conflated HCSM coverage with traditional insurance and for selling insurance without the required state business certificate.

In October, then-attorney general T.J. Donovan and then-DFR commissioner (now State Treasurer) Mike Pieciak issued a joint statement warning consumers “to be wary of unlicensed health insurance products that promise considerably lower costs.” They continued:

Healthcare sharing arrangements are typically marketed to closely resemble comprehensive health insurance plans, like those found on Vermont Health Connect and through licensed insurers, replete with provider networks and “gold,” “silver,” and “bronze” plan tiers. They frequently describe themselves as an alternative to health insurance but use different terms for insurance concepts (for example, “share” instead of “premium,” “need” instead of “claim”) and often structure their advertising to lead consumers to believe that consumer “needs” (i.e. healthcare claims) will be paid and that their products are a viable alternative for “traditional health insurance” that will reduce consumers’ financial risk.

These arrangements, however, do not guarantee payment of claims—meaning that while they may share funds with members who have health needs, they are not legally obligated to do so. Their advertising materials may obscure the fact that there is no guarantee that consumers will actually be paid for any healthcare costs.

Gov. Phil Scott echoed the sentiment: “There is no value to the consumer in these illegal arrangements and could only make the challenge of health care coverage worse if the entity or individual is not required to cover any potential costs.”

That word “illegal” is somewhat problematic, and at odds with the governor’s action in signing an H.524 that included the HCSM exemption. We’ll get back to that in a moment.

The warning and consent agreement did nothing much to deter the activities of HCSMs and related marketing firms. In June 2022, DFR issued a “cease and desist” order against Premier Health Solutions, LLC for deceptive marketing. Premier is a Texas-based marketing firm that acts as a broker for both HCSMs and traditional insurers, and it routinely blurs the lines between the two.

Spoiler alert: Premier hasn’t changed its marketing tactics. It still operates as a broker offering traditional insurance and HCSMs side by side using the deliberately fuzzy language described above. (Premier gets an average of 1.17 stars out of five in Better Business Bureau customer ratings.)

Regulating HCSMs is a tricky business because they are not legally insurance, despite the governor’s use of the word “illegal.” You can’t force them to operate under insurance law; you can only go after them if they market their offerings deceptively. Which isn’t easy.

But there are things we could do. We could enact laws requiring full and clear disclosure of what HCSMs cover and what they don’t. That’s not insurance regulation, it’s consumer protection. We could also force HCSMs to pay out a decent percentage of their income in actual benefits. (One HCSM paid less than 20% of its income in benefits. Traditional insurers are required to pay at least 80%.) As far as I can tell, there is no movement on any new legislation, nor are there any current investigations of HCSMs by state officials.

We don’t know exactly how many Vermonters are enrolled in HCSMs, but nationwide it’s thought to be a million or more. There must be thousands of enrollees in Vermont, and they deserve whatever protection we can offer them in our laws.

Note. John Oliver devoted an edition of “Last Week Tonight” to HCSMs, and Pieciak was a consultant for the program. Samantha Bee also covered HCSMs in an episode of the late lamented “Full Frontal.”