An Open Door to Discrimination: How the New ICHRA System Threatens Fairness in Health Benefits
Keep US Covered posted on March 5, 2021
The Affordable Care Act (ACA) enshrined – in federal law – new protections for Americans. The law “prohibits discrimination on the basis of race, color, national origin, sex, age, or disability.” And yet, in the final year of the Trump Administration, a new regulation went into place that opens the door to discrimination. This new system – built on plans called ICHRAs – represents a threat to the quality, affordability and basic fairness of health coverage in the workplace. It means some workers could get comprehensive health coverage while others in the same company are given a voucher and are forced to obtain potentially less robust health coverage on their own.
This creates health care coverage haves (those who keep the coverage they’ve earned) and have-nots (those only given vouchers) among working Americans. But it also means employees can be divided by classes (full-time, salaried, hourly, etc.).
In the “best-case” scenario, this is a cost-cutting measure whereby some workers get worse coverage. Worse, however, is the potential for employees to be penalized based on how expensive they are to cover, where they live, or what kind of job they do. It’s not difficult to imagine ways this system can be used to undermine the goals of a more equitable health system.
What is an ICHRA?
As the name implies, workers with ICHRAs are reimbursed for insurance rather than participating in a health insurance plan coordinated and sponsored by their employer. Participants in this system typically purchase an individual plan on the Affordable Care Act marketplace and employers reimburse them for their premiums, up to a set limit. There are, however, no rules governing the quality of plans for ICHRA participants, or the amount employers provide for reimbursements. It leaves workers with little protection and potentially fending for themselves.
Who is most likely to be given an ICHRA?
This rule means that some workers or “classes” of workers – such as hourly wage workers, or those in a particular location – get different insurance than other people in the same company. Allowing workers for the same employer to be divided into different “classes” all but guarantees some receive inferior forms of coverage.
For example, workers in a factory in one state could be dumped into an ICHRA, while executives at headquarters in another state keep their employer-provided health plan. This may benefit the company or those who get to keep their current coverage, but it’s unfair to the workers placed in an ICHRA.
This is a clear invitation for discrimination. Health experts have warned that higher risk groups of employees (i.e. the most expensive ones to insure) could be cleaved off a company’s health plan and forced into an ICHRA, hurting the most vulnerable in a workforce while protecting those who are better-off.
What can we do about it?
ICHRA policies threaten the progress made and protections created through the Affordable Care Act. While these rules have invited health care discrimination into the workplace, they can be reversed by the new presidential administration. And President Joe Biden has already indicated he recognizes the problem. On January 28, Biden signed an executive order directing federal agencies to review this regulation to potentially revise or reverse it. Keep US Covered and like-minded organizations are urging the Biden Administration to rescind this rule and restore fairness and protect the quality of worker’s health coverage. You can learn more and join the effort at KeepUSCovered.org.