Pulling back ICHRAs and STLDI – a Step in the Right Direction
Keep US Covered posted on March 25, 2021
President Joe Biden and his administration have prioritized strengthening the American health care system early on in his first term. Living through a once-in-a-century pandemic has highlighted long-existing disparities and inequities in health care.
The Biden administration already announced a sizeable investment in health equity, targeting communities that have been especially harmed by Covid-19. This is an important shift in priorities over the last four years, and taken with the executive order President Biden signed in January directing federal agencies to look into potentially unfair Trump-era policies, it is clear this administration is serious about leveling the health care playing field for Americans.
Two important places to start on the journey to ensuring health equity in communities of color are the Individual Coverage Health Reimbursement Arrangements (ICHRAs) and Short-Term Limited Duration Insurance (STLDI) rules, which are both part of the Biden executive order mentioned above.
Genuine health equity will not be achieved overnight, but by focusing on these misguided policies that serve to further expand disparities in coverage and health outcomes and meaningfully rolling them back, health coverage can be strengthened for workers and Americans can again have the peace of mind that they are covered.
How ICHRAs work against the goal of health equity
ICHRAs unfortunately open the door to discrimination in health coverage. The Trump-era ICHRA rule creates a system that incentivizes employers to divide their workforces into different classes (salaried vs. non-salaried, front office vs. factory, etc.) and offer different forms of health coverage to each. Some employees keep the comprehensive employer-sponsored health coverage they have earned, while others are given a stipend by their employer and are forced to buy health insurance on their own in the individual marketplace.
This creates a system of haves and have-nots. Employer-sponsored plans offer more robust coverage and more extensive provider networks. Workers shoved onto ICHRAs only have the stipend provided by their employer to work with and might end up spending more out of their own pocket to get the coverage they need.
It is not hard to imagine how this system could unintentionally lead to marginalized groups of people getting coverage that is inferior to what workers once had. The rule encourages employers to move older, expensive-to-insure workers onto ICHRAs to defray costs. “Classes” of workers could conceivably be determined in such a way that pushes people of color onto this lesser form of coverage.
If the goal is leveling the playing field to achieve health equity, eliminating this policy that creates a fundamentally unfair system should be a priority.
How STLDI accelerates damaging disparities
The STLDI rule that expands the definition of short-term coverage to as long as three years leaves Americans underinsured and makes disparities in our health care system worse. These plans appear to be legitimate insurance and at first glance have small price tags, which makes them attractive to consumers. But stringent coverage limits, restricted provider networks, and the unexpected medical bills that are commonplace with these so-called junk insurance plans make them a threat to the health of American families.
Because these plans often do not cover things like prescription drugs, maternity care, mental health, or free preventive care – as required for plans under the Affordable Care Act – they leave people exposed to high out of pocket costs to stay healthy. Or, they encourage people to skip getting the care they need to spare their wallets. And when people delay or avoid getting care, the chance for more serious health problems down the road grows.
Americans who do not get health insurance through their employer need to have confidence that the options in front of them on the individual marketplace meet their needs. They need to know they are covered. But allowing consumers to buy plans that were designed to fill gaps in an individual’s coverage, such as when they are in between jobs, under the guise of full coverage will only make health disparities between Americans more severe.
How can we fix it?
Every health care policy change does not need to be a big splash in order to have a big impact. The legislative process can be cumbersome, especially in the current political environment. But incremental steps that protect the health coverage American workers have earned and remove the threat of junk insurance will help meaningfully narrow the gap between the haves and the have-nots in our health care system. Keep US Covered is committed to working with the Biden administration to roll these rules back and further their efforts to achieve health equity.