Individual coverage health reimbursement arrangements, or ICHRAs, are either the future of health coverage or merely a blip on the radar, depending on who you ask.
ICHRAs allows employers to offer workers tax-free money to buy insurance through the Affordable Care Act (ACA), rather than being told to select a plan.
These plans give flexibility to consumers and are not tied to employment. Many businesses find ICHRAs to be a good option when employing workers across state lines. But brokers are hesitant so far to push ICHRAs and the provider networks are traditionally more limited.
Companies like Oscar Health, Centene and eHealth are shifting some resources toward the trend.
ICHRA provider Remodel Health, having recently acquired PeopleKeep, announced before the holidays it raised $100 million from Oak HC/FT and Hercules Capital, and the company said its business grew by 11 times in broker-led ICHRA bookings. A new ICHRA platform was also launched by Bain Capital called BizCare Benefits.
In certain pockets of the country, ICHRA is not seeing much as much momentum. First Choice Health CEO Jaja Okigwe finds the support around ICHRA to be fervent at times.
“I’ve definitely seen employers pretty skeptical of ICHRA,” he said at the Fierce Health Payer Summit in November. “I’ve also seen a lot of pro-ICHRA people out there telling me it’s going to be big. In some ways, it reminds me of Bitcoin.”
Instead, he’s seeing medium-sized employers with workers around the country go back to the fully insured model, where companies can offer a standard experience.
In Arizona, ICHRAs are not especially common, either, said fellow panelist Tom Grote, CEO of Banner Aetna. He believes this is because ICHRA plans are difficult to administer and brokers are worried about potential impact on their livelihoods.
“I think that is a pretty significant obstacle to overcome to see greater and wider adoption of these plans,” he said. “And from an employee recruitment perspective, are people going to be comfortable with that option, versus having a set plan premium that they know about?”
ICHRA-focused companies could help fill this gap, ensuring individuals are picking plans with the help of certified professionals.
Regionalization plays a significant factor in ICHRA adoption, said Fran Soistman, CEO of eHealth, in an email to Fierce Healthcare. Urban locations with ACA plans are generally more inundated with ICHRA plans, whereas rural areas with fewer insurance providers feel differently.
“I think the biggest thing has to do with the competitiveness of the individual market to the group market,” said Take Command CEO Jack Hooper, founder of one of the largest ICHRA provider and vendors, in an interview. He explained that in a state like Alabama, where there are limited options, it doesn’t make financial sense to adopt ICHRAs, but that isn’t the case in states like Colorado, Minnesota or Pennsylvania.
“If you’re in the northeast, ICHRA is a lot more complex because of a lack of data sharing,” said Andrew Reeves, senior vice president and general manager at Gravie, a health benefits company, in an interview. “If you’re in the southwest or south or midwest, you see a lot of different traction, mainly driven by the products that many of the carriers have put into the market.”
Take Command points to Lycoming College, a liberal arts university in Pennsylvania that began adopting the ICHRA model. The university saved $1.4 million on healthcare costs in the first year, and employees saved $1,200 a year on premiums.
Whether ICHRAs increase in popularity will be determined by the user experience and the financial impact it has for businesses and their employees.
“To be candid and bold about it, I think group insurance days are numbered,” said Hooper, mirroring comments made from Oscar CEO Mark Bertolini recently. “I don’t think it’s tomorrow. I don’t think it’s three years. I think in 15 to 20 years, though, we’ll look back and say, ‘Wow, what happened to group insurance?’”
Hooper said this is because premiums are rising and employers are continuing to take on risk, and younger generations are desiring more personalization in healthcare plan selection.
The concepts of ICHRAs were first introduced under the Obama administration through qualified small employer health reimbursement arrangements, or QSEHRAs, which allowed only small businesses to use the plans. The Trump administration created ICHRAs to expand the approach for employers of all sizes.
Though Republicans position themselves as opponents to the ACA and could choose to not extend the enhanced premium tax credits expiring at the end of the year, they may be willing to continue supporting ICHRAs. Democrats, meanwhile, may be open ICHRA-positive legislation that bolsters the ACA.
“Our concern is that it gets tainted politically, one way or the other,” said Hooper. “We really want to see ICHRA stay on the bipartisan straight and narrow.”
Both Take Command and Gravie are part of the HRA Council, the industry-backed group advocating for ICHRA plans.
Today, most of ICRHA deals only with medical coverage, but Reeves believes more options—like plans offering condition-specific or dental benefits—will begin popping up.
“I do think we’re in that early stage,” he said. “If you have 200 employees, the medical benefits are coming through the ICHRA mechanism, but they’re still offering group dental. I think we’ll see an expansion and maybe even a broader shopping platform type of approach.”