A map showing individual coverage looks a lot cheaper in some states than in others A map showing where individual bronze coverage looks cheapest (in the tannest states) and most expensive (in the bluest states). (Credit: Vericred)

Analysts at Vericred think they can see where cost differentials will push small employers toward, and away from, the new individual coverage health reimbursement arrangement (ICHRA) programs

Vericred is a New York-based company that gathers and sells health care provider data and health plan data, and related tools and services.

The company’s analysts have sketched out their vision of the ICHRA market map in a collection of interactive cost-differential maps, where tan counties look great ICHRA opportunities and blue counties look ICHRA-resistant.

Resources

  • An interactive version of the Vericred cost-differential map collection is available here.
  • An article about how the ICHRA rules will work is available here.

In the states with the most vibrantly tan counties, “an employee would likely pay less on the individual market compared with the small-group market,” according to the Vericred analysis. “This, obviously, makes such a transition more appealing.”

In the bluest states, small-group coverage appears to be a better deal than individual coverage, and employers there would probably be more inclined to stick stock with traditional group health coverage, according to the Vericred analysis.

The ICHRA

U.S. health benefit plan designers have dreamed for decades about finding ways to help employers give workers cash the workers could use to buy their own individual coverage.

Cash-for-coverage designers often ran into a serious obstacle: Most states let insurers use medical underwriting to reject applicants with serious health problems or charge the sicker applicants higher rates.

Cash-for-coverage program designers had to figure out how to recruit health coverage issuers that would be willing to do without medical underwriting.

The Affordable Care Act (ACA) eliminated the medical underwriting obstacle starting in January 2014. But officials in the administration of former President Barack Obama developed statute and regulation interpretations that discouraged use of cash-for-coverage arrangements, because of concerns that the arrangements would destabilize the market for traditional, fully underwritten small-group coverage, by luring the employers with the youngest, healthier workers out of the traditional group health insurance risk pool.

Under President Donald Trump, the federal Employee Benefits Security Administration, the Internal Revenue Service and the U.S. Department of Health and Human Services have developed new regulations that encourage use of a new type of HRA, the ICHRA, to give employees cash for coverage.

A federal court in Texas has issued a ruling that could kill the Affordable Care Act ban on health insurer underwriting and make use of ICHRA programs impractical, due to problems with sicker employees buying individual health coverage.

The ICHRA Market Map

Vericred is interested in the potential size of the ICHRA market because it wants to sell health plan directory data to ICHRA plan sponsors and ICHRA support services providers.

The company’s analysts have sized each state’s market by looking at where ACA-compliant individual major medical coverage is cheaper than fully insured small-group coverage and where it’s cheaper.

The analysts created their map using price data gathered via direct partnerships with insurance carriers and publicly available information.

The analysts calculated various price gap indicators, for 27-year-olds and 50-year-olds, on a county-by-county basis, and created a collection of interactive maps based on the gap data.

One map, for example, is based on the difference between the monthly premiums for the lowest-cost bronze plans, or budget-level plans, on the individual and small-group markets, for 50-year-olds.

For 50-year-olds with bronze-level coverage, the ICHRA opportunity looks strongest in Alaska, Georgia, Minnesota, New Mexico, New York state, North Dakota, Ohio, Rhode Island, and South Carolina, and worst in Nevada, South Dakota and West Virginia.

One limitation of the ICHRA opportunity map is that it’s based solely on current costs. In the real world, some of the other factors that could affect adoption of ICHRAs are how warm the local state insurance regulators, health coverage issuers and health insurance producers are to ICHRA arrangements; how well the cheaper coverage options really work; and how comfortable an employer’s employees are about the idea of shopping for individual coverage.

— Read Does DOL’s HRA Proposal Go Far Enough? Bloink & Byrnes Go Thumb to Thumbon ThinkAdvisor.

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