LINCOLN, Neb., as vicar general for the Diocese of Lincoln in 1996, Msgr. Robert Vasa never expected to create the first group medical-insurance plan in the United States designed to comply with Catholic teaching.

            As the chancery's chief financial officer, Msgr. Vasa was only trying to find ways to cut the diocese's costs. Then he discovered a larger problem. "There was no exclusion for abortion coverage under that plan," recalled the one-time vicar general. He was appalled by the discovery. "I discovered our diocesan plan would have paid for abortions, should someone have chosen that option. Tubal ligations, vasectomies and the like were also covered services."  Back then, Msgr. Vasa saw no way to proceed except to undertake a gargantuan task: to design a new plan for the Lincoln Diocese that excluded the practices.

            Now, with the plan he created insuring a growing number of Catholics all over Nebraska, he sees his involvement as providential. With changes in health insurance sweeping the country, he believes, Catholics can no longer assume their insurance plans are in line with their beliefs.

            In California, for instance, a law which went into effect Jan. 1 requires all state-regulated health insurance plans to cover contraception and abortion-causing pills if they cover prescription drugs. California is the 10th state to adopt this policy, and others are sure to follow.  In a more hidden way, many insurance plans also fund abortions. Some require the insured to buy a special "exclusion" to opt out of this coverage. Could a Catholic diocese provide insurance coverage in such a climate?

Out of the Dark

            "We went through a very big process, because our original plan, the one Msgr. Vasa wanted changed , only covered the diocesan priests and a few chancery employees," said Marsha Morrison, assistant to the vicar general in Lincoln. Morrison worked with then Msgr. Vasa to develop the plan, and now helps with its administration under a new vicar general. "We first looked at the premiums and administrative costs for the plan we had, and they were high. We were concerned about stepping into self-insurance."

            After investigating the options available, Msgr. Vasa had decided on an unconventional choice: a self-insured plan. This meant the diocese would design its own insurance plan to serve only the people in its group. Such self-insured plans are regulated by federal, rather than state, laws.

            Before crafting this type of plan, now Bishop Vasa recalled, he called in agents from an array of health insurance providers to present their plans. When he explained he wanted to exclude coverage for some morally objectionable procedures or prescriptions, he recalled, "I received no satisfactory answers and absolutely no assistance."

            Some providers were willing to customize plans for the diocesan group, but he said he realized "under each of these plans we would still be paying for morally objectionable procedures.  We were simply not making them available for the people in our group."  And the insurance agents did not want to combine the schools and the diocesan priests into one plan because the latter, with their higher median age, were more expensive to insure. Several of the priests, currently insured with supplemental policies, would also have been covered under the new plan.

             "The dimension that was missed by the brokers was that the Diocese of Lincoln is one entity," the former monsignor explained. "The same parishes who were paying the high premiums for our priests were paying at least a portion of the premiums for our teachers."

            To Msgr. Vasa and Morrison, bringing all diocesan employees under one plan was an obvious move, but the insurance companies' actuaries and underwriters looked at their bottom lines and resisted.  Enter insurance experts Michael O'Dea and Tracy Williams.

            O'Dea, an insurance broker from Southfield, Mich., founded the Christus Medicus Foundation to educate Catholic dioceses and institutions about how insurance plans can fund immoral procedures and services. Williams is vice president of Benefit Systems, a company that designs and administers group health care plans in Indianapolis.

These two men used their expertise to help the Lincoln Diocese create a Catholic plan, which it implemented in July 1998. Msgr. Vasa became Bishop Vasa and was installed in Baker, Ore., a year later.

A Boon to Catholic Health Care

            O'Dea was not surprised to hear about Lincoln's dilemma when the diocese contacted him for consultation.  Many dioceses don't realize that "in these health care plans, the information about how the plans cover reproductive services is kept confidential from the group itself," O'Dea noted. "Usually, only the insurance company, which pays for the medical service, and the person using the service knows what is covered."  He said institutions nationwide are discovering they are funding abortions, contraception and sterilizations through their insurance policies without ever being informed by their insurance companies.

            Michigan attorney Richard Myers said the problem is enormous. "A statistic was published in 1993 by the Alan Guttmacher Institute," he noted, "that showed 71% of HMOs were not only paying for abortion but keeping it confidential from spouses of the insured and from the parents of insured minor children under age 18."

            Until a few months ago, Myers worked as lawyer at the Thomas More Center for Law and Justice, a Catholic firm in Ann Arbor, Mich., that specializes in pro-life legal work. Myers still consults with Thomas More, but recently accepted a faculty position at Ave Maria Law School, also of Ann Arbor.

            Can insurance companies do anything about the new state laws requiring contraceptives be covered along with other prescriptive drugs? Helen Stojek, a spokeswoman for Blue Cross-Blue Shield, said insurance companies are only following state laws. "If there is a law requiring coverage of contraceptives, we can't do anything about that."

Lincoln's New Plan

            The Lincoln plan, in a state that doesn't require such coverage, caught on.   "We first implemented this with the priests, because we did not want to impose this on anyone else," explained Marsha Morrison. "But then we opened it right away to lay people. We had a fantastic turnout. I was amazed how many doctors joined the plan. We got all the self-professed Catholic physicians in our area."

            The doctors and other health care professionals were joining to be able to serve the priests. The largest Catholic hospital, St. Elizabeth's in Lincoln, soon joined as well. Despite being dropped from supplemental plans, the priests were able to use their former doctors, and the administrative costs for their plan fell. In the first year, administrative fees for the priests alone fell about $30,000, Bishop Vasa recalled.

            "It turned out to be a more financially viable program which gave the diocese significant dollars," O'Dea agreed. Cost administration went way down, marketing costs were reduced."

            Physicians were joining the network, now called Midwest Select, throughout the Lincoln Diocese. Soon after, the Archdiocese of Omaha also joined the Midwest Select network of providers, although it retained another health insurance. "The Catholic system was enhanced throughout the state of Nebraska," said O'Dea.

            Added Lincoln's Morrison, "The plan is now allowing smaller schools and parishes to insure their staff, while before, even the chancery could not insure all of its employees, because it was too expensive."

The Precedent

            The California precedent gives dioceses there an even greater dilemma than Lincoln's.  "There is a religious exemption to the California law," noted attorney Richard Myers, "but it's so narrow that it basically doesn't cover anybody." Catholic soup kitchens and hospices don't qualify for the exemption, he said.

            But could a plan like the one implemented in Nebraska be used in California?

            "We could design such a plan for a self-funded group, but we are very concerned about the challenge to do that," O'Dea said. "We have to move on getting a federal health care 'freedom of conscience' act to protect ourselves."

            Bishop Vasa said the eventual solution will be to provide a health insurance "based on religious principles" and protect it with a conscience clause. Employers would need to provide that option for those who wanted it.

            "Now that I am out in the Northwest, I am looking at what the possibilities are," the bishop added. "It takes a certain critical mass and also the right kind of health care centers. But I feel it is a way for the Catholic Church to make a Catholic insurance option available to every Catholic."

Kate Ernsting writes from Ann Arbor, Michigan