How A Lobbyist-Created Obamacare Loophole Enabled A Multibillion-Dollar Christian Health Care Cash Grab

Capitalizing on the pressure to pass the Affordable Care Act, a conservative lobbyist created an exception for faith-based health coverage, opening the door for “bad actors.”
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This article first appeared at ProPublica. ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.

Joe Guarino rescued an entire industry with help from what some called “divine” intervention.

A little-known lobbyist from Virginia, Guarino was hired in 2007 by the Alliance of Health Care Sharing Ministries, the trade association for nonprofit alternatives to medical insurance founded on Christian principles. Health care sharing ministries take fees from members, which are then used to pay other members’ health bills.

At the time, the industry had been tainted by a scandal involving one of the largest ministries in the country, the Christian Brotherhood Newsletter, based outside Canton, Ohio. State authorities won $14 million in civil judgments against two of its top leaders for enriching themselves instead of paying the medical bills of its members. A ProPublica investigation last month revealed that many of the Brotherhood’s executives, including Daniel J. Beers, were involved years later in the launch of a second scandal-plagued ministry, Liberty HealthShare.

The Washington-based alliance was looking to Guarino to repair the industry’s reputation and pass laws to fend off a looming movement to regulate the business. The lobbying effort is an example of how the ministries have quietly worked over the years to shield themselves from consumer protection laws and preempt government oversight.

Guarino decided to launch a state-by-state campaign to pass so-called safe harbor laws that exempt health care sharing ministries from insurance regulation. The carve-outs were justified, the alliance argued, because ministries don’t set prices and coverage based on risk calculations or pool people’s money, as insurance companies do. In the United States, many of the rules for health insurance are set by the states in which companies operate.

Guarino met with lawmakers in Virginia, Arkansas and Idaho. “Most of the time I was hiring local lobbyists, training them, and then they got the bill passed for us,” Guarino explained.

Although it did not attract much attention, the campaign was a remarkable success. By 2008, 15 states had passed safe harbor laws. Then, a new threat emerged. In 2009, President Barack Obama proposed his sweeping reform of the health care system. Central to the law was a provision referred to as the “individual mandate,” which required that every American obtain health insurance or face a fine. The mandate presented a direct threat to health care sharing ministries: If members were forced to buy insurance, they would likely leave en masse.

Although Guarino was embarrassingly outgunned by the health insurance lobby, he was determined to slip some version of a safe harbor carve-out into whatever the Democratic-controlled Congress handed the president. “I went and saw 150 congressional staffers during that time,” Guarino said.

The turning point came when Guarino reached out to a GOP state legislator he knew in Iowa and asked if she could put him in touch with Republican Chuck Grassley, the state’s longtime senator who wielded power as a member of the Senate Finance Committee. The lawmaker had known Grassley’s family since childhood and agreed to set up a meeting. “Lo and behold, that happened,” Guarino said. “As a Christian, I look at this and say, ‘Oh, this is God’s way of orchestrating things.’”

Guarino told ProPublica that he and his clients got on the phone with Grassley. Together they crafted an amendment to Obamacare that exempted members of sharing ministries from having to obtain health insurance on religious grounds. Behind the scenes, Grassley got that carve-out into the Senate version of the bill, Guarino said. (Grassley did not return a request for comment.)

The passage of the Affordable Care Act was chaotic and, for ministries, that was fortuitous. The House version, which many Democrats preferred, didn’t include Guarino’s exemption. If the House bill prevailed in negotiations between the two chambers, ministries would be extinct.

But with the sudden death of Sen. Ted Kennedy, Democrats lost their filibuster-proof majority in the Senate and could not pass the House version. They were forced to go with the Senate bill that included the carve-out.

The exemption — just 200 words in a 900-page bill — survived tense negotiations between the chambers, going virtually unnoticed. Obama signed the ACA into law in March 2010.

“That’s our language right in the bill,” Guarino told ProPublica.

One friend told him that he’d just saved an entire industry. The larger Christian health share community hailed it as a miracle. “If you’re a person of faith, some of us might say it was kind of divine,” said Tony Meggs, then CEO of Medi-Share, one of the groups that formed the Alliance of Health Care Sharing Ministries.

Meggs estimates membership grew tenfold after 2014, when the individual mandate went into effect. Four years later, the alliance announced that about a million Americans belonged to its member ministries. Some bought into the ministries because they disliked Obama and associated him with the law. Others did it for economic reasons. The ministries offered cheaper plans than insurance sold on the ACA marketplace, which were expensive for anyone who did not qualify for subsidies or Medicaid. Many self-employed people and small business owners fell into this category.

“All of a sudden people started getting religion because they could save $700, $800 a month,” Meggs said.

Both Meggs and Guarino say they believe that most health care sharing ministries do right by their members and the insurance alternative can work when it’s under ethical management. But both acknowledge the industry has been vulnerable to abuse. “Obviously, that kind of growth is going to attract bad actors and people who look for opportunity to enrich themselves,” Meggs said.

One of the people who took advantage of the opportunity is Beers, the patriarch of the family that started Liberty HealthShare just as Obamacare’s individual mandate drove thousands of people to health care sharing ministries. The ProPublica investigation found that Beers acts as a shadow lord over an empire built with money from Liberty HealthShare. Some of the family grew rich while Liberty’s members were left with tens of millions of dollars in unpaid health bills.

Beers’ name does not appear on any official documents related to Liberty, and he denied involvement in family businesses that profited from the ministry. Attorneys representing Beers and members of his family also disputed ProPublica’s finding that they controlled or influenced the sharing ministry or did anything wrong. Liberty is now under new management that does not include Beers or his relatives.

For those in the ministry industry, however, Beers’ involvement has been an open secret for years.

Meggs told of a surprise encounter he had around 2014 with Liberty’s then-CEO, its vice president and Beers, all key figures in the Brotherhood. The group wanted to propose a partnership between Meggs’ ministry and Liberty, which was experiencing explosive growth

At the meeting, Beers was clearly in charge, Meggs remembers, so no matter what they were selling, he wasn’t buying.

Liberty, he said, looked too much like the Brotherhood.

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Notable Replies

  1. Grifter “Christians.” What could go wrong?

    1 Timothy 6:10 "For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows."

  2. When it comes to right wing Xtian Pulpit Pimps it’s all about fleecing the marks for every last tax-exempt penny they can get their hands on!

  3. In today’s world of Venmo, and other money payment apps why would anyone send their money monthly to a place, Christian or not? If you feel the spirit calls you to help other’s then all you need is website to list who needs money for what. Otherwise you keep your money under your control, and the you’re not allowing parts of your monthly monetary payment to enrich others with the service fees.
    Do people not know how to budget any more?

  4. The solution here is really quite simple: apply the “duck” principle1 to these “ministries2.” They take in periodic payments from subscribers, they set rates for those payments, they negotiate payments to health care providers and pay them (at least when the ministry is being conscientious about fulfilling its promises). Everyone of those things is something insurance companies do: in fact, those are the critical functions of insurance companies.

    By the duck principle then, these ministries are (functionally) insurance companies. They need to be regulated and overseen like any other insurance company.


    1 The “duck” principle says, if creature looks like a duck, waddles like duck, and quacks like a duck, it is a duck.
    2 “Ministry” is used here in its XXI Century sense of scam or long con.

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