HCSM Myth #10: They’re pyramid schemes

From the beginning of health care sharing ministries, objections to the approach have been raised that do not accurately reflect reality. To help clear up these misunderstandings, we’re running a series of posts that dispel those myths.

Myth #10: Health care sharing is a pyramid scheme (or Ponzi scheme, etc.).

Here’s how the Securities Exchange Commission defines a “Ponzi scheme”:

A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.

Here’s the SEC’s definition of a “pyramid scheme”:

In the classic “pyramid” scheme, participants attempt to make money solely by recruiting new participants into the program. The hallmark of these schemes is the promise of sky-high returns in a short period of time for doing nothing other than handing over your money and getting others to do the same.

Members of Samaritan Ministries send their money directly to each other. The only money sent to the ministry’s office is an annual membership fee of $170, plus a new member’s first three monthly shares. Shares are only sent to households that have sent itemized medical bills to Samaritan and whose bills have been determined to be within the ministry’s Guidelines.

Health care sharing is not a “Ponzi scheme” because there is no promise of “returns” to “investors.” In fact, Samaritan goes to pains to make sure anyone interested in joining knows there’s no guarantee of any kind of payment since we aren’t insurance. We operate on faith, and have done so for 17 years. And our method is effective.

Neither is health care sharing a “pyramid scheme” because, while members are encouraged to spread the word about Samaritan, there is no requirement for them to get new members to sign up in order to be able to remain members. There is the incentive of a $170 credit (the equivalent of a year’s membership fee) for those members who are listed as referrals by new members, but telling others about Samaritan is not required.

There is also no need to recruit new members so as to “pay off” a backlog of needs of the old members. The amount of needs in the SMI queue after each month’s sharing is not allowed to exceed 50 percent of a month’s shares available and is normally substantially less than 25 percent.