We encourage the study of medical ethics, and help members to establish advance directives for end-of-life decisions.

We have a "nurse in the congregation" program to help our members get information before they access the health care system.

MMA's Concerns About Health Care Reform

MMA supports the health care reform principles the President is calling for and we think universal access is of highest priority. We want to support government in bringing about reform. Our concerns are focused on the requirements related to the regional alliances.

Regional Alliances

Our theology and the practice of our beliefs for over 400
years has centered upon mutual aid in the community of
faith. Our members would have a problem with being forced
to join a large alliance with many people who do not share
our beliefs and values. If mandatory alliances were
enacted, some of our people would refuse to participate.
believe the alliance could become a significant barrier for
Mennonites connecting with the MMA health plan.

We

Health plans registered with the regional alliance will be available to everyone in the region. They must accept anyone who signs up. Such a requirement would directly contradict the very basis of MMA's health plan. Members of our health plan must first be members of a Mennonite or related Anabaptist congregation. Our market is by necessity a closed one which is not open to members of the general public who do not share our beliefs and values.

Beliefs rather than employment bond Mennonites to MMA

In many of the proposals for health reform, including the Clinton's, exceptions are created only for large groups in an employment relationship. The Clinton Plan, for example, would let multistate employers with more than 5,000 employees opt out of the compulsory regional alliances.

MMA is a multistate organization with 47,000 members. We
are subject to regulation as an insurer in every state where
we transact business. We respectfully request the ability
to opt out of the regional health alliances on the basis of
the strong ties of religious faith which connect members
with MMA. As an alternative, MMA would like to operate as a
closed health plan for members of the Mennonite and related
Anabaptist faith community. MMA would remain subject to
state insurance regulation and any other requirements
Congress imposes for health insurance coverage as long as
these requirements are not directly in conflict with our
beliefs.

Chairman STARK. Thank you, Mr. Sommers. Let me—and if this is information you feel is privileged, please don't hesitate to tell me so, but could-what I am curious to get at is if you know for the people who I am going to suggest you insure, if that is the proper terminology, if you have a ballpark average cost per year per person? Is that something you could do?

Mr. SOMMERS. I don't have that off the top of my head. I would be glad to supply it for you.

[The following was subsequently received:]

February 22, 1994

MMA

Mennonite Mutual Aid
1110 North Main Street
Post Office Box 483
Goshen, IN 46527

Toll-free: 1-800-348-7468
Telephone: 219 533-9511
Fax: 219 533-5264

The Honorable Pete Stark
Chairman, Health Subcommittee
Committee on Ways and Means
U.S. House of Representatives
239 Cannon Office Building
Washington, D.C. 20515

Dear Mr. Chairman:

Thank you for inviting Mennonite Mutual Aid to provide testimony for your Health Subcommittee on February 4. I agreed to supply you with some additional information about the cost of MMA's health plans.

Most of our health plans purchased by persons under age 65 would be classified as "Individual Health" by standards of the marketplace. For 1993, the average annual price our members paid per covered person was approximately $1,479. This figure covers a variety of comprehensive major medical plans. The average annual price per person covered at the end of 1993 in our most recently issued comprehensive plan with a $250 calendar year deductible, 80/20 coinsurance is $1,225.

Our administrative costs have been lower than others in the past. Over the period of time from 1989 through 1993, total administrative and sales expenses as a percent of health revenues averaged 15.6% for this block of business. These costs also include expenses incurred to develop and implement new forms of managed care.

I'm enclosing a graph showing administrative expense ratios from various types of organizations for calendar year 1992. This information has been reported to us from A. M. Best in the general insurance press, through our consulting firm Milliman & Robertson, and from the New England Journal of Medicine. The graph shows that expense ratios for individual and small group carriers are in excess of 30%, large group carriers slightly under 25%, HMO's at 15%, and hospitals at 25%. MMA's expense ratio of 15.1% for 1992 is noted with the red horizontal line.

There are several factors which enable MMA to operate at lower overhead cost levels. Salaries for management positions are significantly lower than for commercial organizations. Members of our churches have a propensity to purchase their coverage from MMA, making our costs related to sales lower. MMA's staff and operations are located in a relatively low cost-of-living area.

The MMA staff has a strong work ethic. Much of this grows out of our heritage as a people. But it also relates to MMA's mission. As an organization accountable to the Mennonite Church, MMA is involved with a purpose that is much larger than itself. Many of our staff are willing to "go the second mile" to help with projects because they believe in MMA's vision of serving the church.

Service is a core value that we emphasize. We value serving one another and our customers with commitment, efficiency, and competence. Over the years we've developed efficient systems for running our business. In addition, we budget and evaluate expenses carefully before spending our members' money. This is an ongoing challenge -- to be good stewards in the midst of significant changes in the financing and delivery of health care.

Mr. Chairman, if I can provide additional information to assist you in your committee process, please let me know. Thank you for your sensitivity to our values and beliefs.