A group of mostly blue state attorneys general has asked U.S. Treasury Secretary Steven Mnuchin to withdraw a proposed rule that would allow those enrolled in so-called health sharing ministries to be able to deduct any related expenses. California Attorney General Xavier Becerra, one of the leaders in battling the Trump administration over the legality of the Affordable Care Act at the Supreme Court, is leading the group that sent the letter this week.
The attorneys general argue that allowing enrollees in health sharing ministries to deduct their medical and other expenses would undermine enrollment in plans mandated under the Affordable Care Act, “inflict fiscal harm on the States and providers” and force "them to fill in the coverage gaps and cover the costs of uncompensated care." They added that it was particularly inappropriate to approve such a rule during a public health crisis. They also noted some ministries had been banned in multiple states.
The letter also called the proposed rule "arbitrary and capricious" arguing that health sharing ministries do not meet the Internal Revenue Service’s current definition of health insurance. It was also noted that such rulemaking was the purview of Congress and not the Treasury Department.
The Trump administration has been consistent in incrementally undermining the Affordable Care Act, including relaxing rules around short-term health plans. Such plans often discriminate against would-be enrollees with pre-existing health conditions and do not cover essential services such as maternity benefits mandated under ACA.
Flying under the radar have been health sharing ministries, typically run by or affiliated with religious organizations. They usually only allow adherents of particular religions to enroll, and members can be barred if they smoke or engage in other unhealthy lifestyle choices.
Many ministries are also apparently reluctant to pay out claims for care. Some, such as Aliera Health and an affiliate firm called Unity HealthShare, have been barred from doing business in multiple states, including California.
Nevertheless, the Trump administration wants to promote such ministries by allowing enrollees to deduct their premiums and other medical expenses. But 20 state attorneys general say that’s a bad idea. They insist it will encourage more enrollees in traditional health plans with consumer protections to enroll in a product that appears to be insurance but is anything but. They cited one example of an Aliera enrollee who was left on the hook for $280,000 in medical bills for treatment of a neurological condition.
"The confusion HSMs cause by mimicking traditional health insurance is not without a human toll," the attorneys general argue. "The consequences of medical debt are not limited to depleted savings. The ripple effects from damaged credit can result in long-term economic deprivation, bankruptcy, housing instability, and even homelessness."
The attorneys general also noted that allowing the tax deduction would make their regulatory work much more difficult. "The proposed rule will increase consumer confusion and fraud in a health insurance market that is already difficult to navigate," they write.
In conclusion, they asked Mnuchin to withdraw the proposed rule. The comment period closed on Aug. 10.