Thursday, June 14, 2012

Commonwealth of Kentucky v. Christians begins

The Kentucky Department of Insurance has acknowledged receipt of complaints against two Christian health sharing organizations for illegally selling health insurance to citizens of the Commonwealth.

The organizations are Samaritan Ministries and Christian Healthcare Ministries. The Department demanded, on Monday June 11, a response from them within two weeks.

Such religious-based health sharing organizations are exempt from ObamaCare mandates, sparing their members at least some of the negative effects of the federal law euphemistically dubbed by Congress the "Patient Protection and Affordable Care Act."

At issue is Kentucky law, which defines insurance as "a contract whereby one undertakes to pay or indemnify another as to loss from certain specified contingencies or perils called 'risks.'" This means essentially that most human interactions could constitute "insurance" and invite regulation under the state's insurance code.

An example I have been using is that if I sell you an umbrella on a cloudy day, I could be considered your insurance company under state law. It sounds ridiculous, but it applies to a law that is so overly broad as to be hazardous to our liberties.

A "religious publications exemption" found in state law has been cited as a way for these religious health sharing organizations to escape state regulation. But the Kentucky Supreme Court ruled in 2010 (Commonwealth v. Reinhold) that "the (sharing organization) must be set up so that one subscriber sends the money for assistance to the other subscriber without the money passing through an intermediary."

Both organizations fail on this point, though Samaritan in most cases at least usually operates merely as an information source linking financial needs with payors and suggesting payments.

So, in the eyes of the law, both sharing organizations are insurance companies and should -- again, under the law -- be regulated. Given Kentucky's overzealous regulatory regime, that means shutting them down.

The point of this exercise is that insurance regulation has proven in dramatic fashion to be at least counter-productive by providing an illusion of consumer protection as well as an impossible to miss negative impact on pricing of services. Before we fall for giving near-total control of our health care system to federal and state governments, we should take a closer look at how such control is and has been handled in Frankfort.

If we do that, we ought to agree to dismantle insurance regulation altogether.