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Expert Voices

Expanding HRAs would bolster individual market

From our Expert Voices conversation on plans for health care reform after Trump's executive order:

One under-reported part of the order is its direction "to increase the usability of Health Reimbursement Arrangements (HRAs), to expand employers' ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with nongroup coverage."

Prior to the ACA, HRAs were used by some employers who wanted to reimburse their employees' health care premium expenses rather than offer their own plans. However, in 2013 the Obama administration decided that standalone HRAs violated the ACA. Loosening or reversing those restrictions on using tax-preferred HRAs could fundamentally transform how employers provide health care benefits.

In a recent Mercer survey, 16% of employers said they would consider a standalone HRA for all eligible employees if there were no penalty, and 21% said they might consider it depending on the strength of the individual market. Notably, the Health Insurance Portability and Accountability Act (HIPAA) specifically prohibits employers from gaming the system by dumping less healthy employees onto the individual markets.

The bottom line: If done right, an HRA expansion could strengthen the individual market by adding healthy customers and expanding the risk pools, an outcome that should be cheered by Democrats and Republicans alike.

Other voices in the conversation:

  • James Capretta, resident fellow at the American Enterprise Institute and former associate director for health programs at the OMB: Alexander-Murray deal a flawed first attempt at bipartisanship
  • John McDonough, professor at the Harvard T.H. Chan School of Public Health and former Senate adviser on health reform: Obamacare is dead. Long live the Affordable Care Act.
  • Jeanne Lambrew, senior fellow at the Century Foundation and deputy assistant to the president for health policy in the Obama White House: Health care fix today could be undone tomorrow
  • Christopher Condeluci, principal at CC Law and Policy and former tax and benefits counsel to the Senate Finance Committee: Clearing the air on AHPs