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Close the Gap
Reversing Health Disparities in the U.S.

Kaiser Study: ICHRAs Mean Lower Quality Health Care for Low Wage Workers

As Biden Administration Considers Action, An Alarming 60% of Businesses Say They Want to Target Low Wage Workers for Poor Quality ICHRA Coverage


The Covid-19 pandemic has shined a bright light on the American health system and the stark disparities that exist in the quality of care people can access. Our goal should be to close these gaps and promote health equity. Unfortunately, data from the Kaiser Family Foundation’s (KFF) 2021 Employer Health Benefits Survey shows that a Trump-era health policy would lead to great disparities with lower income workers being offered worse health coverage than those at the top.



Specifically, KFF looked at Individual Coverage Health Reimbursement Arrangements (ICHRAs) and their expected take-up over the next year. These health plans are ripe for discrimination and could exacerbate challenges some families face in achieving equitable care. Under the ICHRA system, some employees can receive typical employer-sponsored benefits, while others are forced to find their own coverage on the individual market, with only a stipend from their employer to cover the cost. It creates a two-tiered system, incentivizing employers to divide up their workforces like never before, and furthering the health disparity gap in America.


Who are the people most likely to receive ICHRAs instead of an employer-sponsored plan according to KFF? The results are startling: Among larger employers currently offering ICHRAs or planning to offer them, 60% intend to utilize them for low-wage workers. And employers of all sizes are considering these arrangements, even as many as 5% of employers that already offer workers health benefits:








Low-wage workers and their families will be pushed onto ICHRA plans, which are more costly and far less comprehensive than what can be expected under a traditional employer-sponsored plan. Beyond the risk of a stipend not covering premiums, these plans may also include narrower provider networks, higher out of pocket costs, and fewer benefits. Add it all up and there is a clear disparity in coverage quality between individuals on ICHRA plans versus those who get their health insurance in the typical fashion through their employer. And year over year, those disparities manifest themselves in divergent health outcomes.



The good news is that the Biden Administration can act to reverse this troubling trend.


When President Biden took office, he prioritized ending health inequities, leveling the playing field for working Americans and improving the health care system for all. In a January 2021 executive order, he asked his administration to review rules that created ICHRAs and expanded the prevalence of Short-Term Limited Duration Insurance, so-called junk insurance. Unfortunately to date, there hasn’t been much movement from the administration.


If the Biden Administration followed through in removing both harmful regulations, it would go a long way to narrow the gaps between the haves and have-nots in the American health care system.


Low-wage Americans deserve the same quality coverage as high-wage Americans. That’s why Keep US Covered is committed to working with the Biden Administration to prioritize health equity and eliminate regulations, like ICHRAs, that promote disparities in health coverage and care.

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