Liberty HealthShare founder, Dale Bellis, and former FDA commissioner, Peter Pitts, sat down and discussed the pricing of healthsharing programs and the decision making process behind share amounts.
You can listen to the discussion on HealthShare Pricing or read the interview below.
How does a health sharing ministry like Liberty HealthShare decide what to charge members?
There's a couple of dynamics that need to be considered when deciding on how to price healthsharing programs and the healthsharing contribution for singles, couples and families.
It’s important to know that our sharing process is simple. It’s not a complicated formula for how we share into one another’s medical bills. We receive submitted expenses each month and then we simply assign a ‘mutual share’ or sharing dollar to each eligible expense.
We calculate our monthly share amounts by using a trusted system. We look at the share amounts that our community has received (the total sum of our Collective SharePower) and divide it by the total amount of bills submitted in a month -- and this number is divided by the number of people participating – the final number should be share amount of our programs.
It’s assumed that submitted medical expenses fluctuate from month to month, because not everybody gets sick at the same time. But the law of large numbers show that the medical expenses submitted even out over the course of a year, so the amount of medical expenses our community shares into are predictable. For example, if you have 100,000 families participating, these 100,000 families will routinely submit about the same amount of medical expenses every month. This pricing system is dependable in terms of what your share amount is going to be.
If the amount of submitted medical costs rise overall, then the share amount will have to increase. If medical services or hospitalizations increase and the group as a whole experiences greater medical expenses, or the overall costs of medical care in America increases, it’s going to impact that group.
Now there's a second category in determining the share amount, and that's the administrative expense. We operate on a 12% administrative expense, 88% of all the members share amount goes straight to those medical bills.
This speaks to the efficiency of health sharing, and one of the things that people have to be constantly reminded about is that health sharing is not insurance.
We don't try to calculate in advance what the medical expenses are going to be, like an insurance company would do at actuarial study, and project what is the expected expense of our healthsharing community and then assign a premium accordingly. We don't do that at all. What we do is post-assessment, it's after the fact.
So it's the fair price for a medical expense that we share into because we are private pay individuals. Liberty HealthShare is a not-for-profit ministry. We participate in community to assist our fellow members and our neighbors. And we are there help one another and lift one another in times of need.