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New Avalere Health Study Examines ICHRA System, Impacts on Worker Health Coverage, Health Equity, and the ACA 

The stipend-based system could cost workers more and provide lower quality coverage

WASHINGTON, D.C. – Keep US Covered today released new research conducted by Avalere Health on behalf of the campaign examining the impact of Individual Coverage Health Reimbursement Arrangements (ICHRAs) on the quality and accessibility of health care coverage options for working Americans. This analysis provides a new look at a controversial Trump-era health regulation that President Biden flagged for review with a health care executive order in January 2021.


The white paper, “Impact of Individual Coverage Health Reimbursement Arrangements on Employees with Group Health Coverage,” estimates that 1.5 million Americans who currently or previously had traditional employer-sponsored coverage may have their insurance replaced by an ICHRA plan by the end of 2022 and will need to find their own coverage. What’s more, their coverage options could come with higher out of pocket costs and access to fewer doctors, according to the findings. As many as 125 million additional Americans are vulnerable to a similar transition under the ICHRA system.


“This research is clarifying and shows that ICHRAs are a bad deal for American workers,” said Keep US Covered Executive Director Sonja Nesbit. “1.5 million workers could be moved off their health care plans and onto ICHRAs by the end of this year alone, which potentially exposes them to lower quality coverage and higher costs. President Biden is committed to promoting health equity and narrowing the health disparity gap, and this research makes it clear that rolling back ICHRAs would be a good place to start.”


Because workers need to find their own health coverage on ICHRA plans, often on the Affordable Care Act exchanges, with a stipend, Avalere’s research explores differences in coverage between traditional group health plans and exchange plans. The analysis shows that over 70% of exchange plans had more restrictive care networks, such as HMOs or EPOs, and “compared with group health plans, exchange plans had networks with 42% fewer cancer and cardiac specialists, 32% fewer mental health and primary care doctors, and 24% fewer hospitals.”


Coverage through an ICHRA may also come with significantly higher deductibles and out of pocket costs than the coverage workers had previously. As the analysis points out, premiums could be higher for older workers compared to their younger colleagues on the individual market, creating disparities within the workforce. And concerningly, lower income Americans could lose Advance Premium Tax Credits (APTCs) critical to affordability. From Avalere: “For low income individuals already enrolled on an exchange, an ICHRA offer could cause them to lose access to APTCs and cost sharing reductions (CSRs), resulting in increased premiums and OOP costs.”


The white paper also references the potential for “higher risk” workers to be targeted for an ICHRA offer, which could “adversely impact the individual market risk pool.” As Avalere points out, when the ICHRA rule was initially created during the Trump Administration, many were concerned this could lead to adverse selection and open the door to discrimination in workplace benefits.


Keep US Covered provided funding for the research, but Avalere Health retained full editorial control. The white paper can be read in its entirety here.


To learn more about Keep US Covered and its partners’ work to educate policymakers on these regulations and the social determinants of health, visit or follow the campaign on Twitter and Facebook.


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