Opinion: STAT+: What does the presidential election mean for ICHRA and the health insurance market?

Over the past two presidential administrations, the health care market has changed dramatically with the introduction of the individual coverage Health Reimbursement Arrangement (ICHRA). ICHRA was launched on Jan. 1, 2020, allowing employers to provide a monthly, tax-free allowance to employees to purchase health insurance on the individual market.

While health care policy in general remains a highly partisan political football, ICHRA has remained steadfastly bipartisan — it just makes sense. However, the broader health care policies that would likely be implemented under a second Trump administration or a Harris administration could have a profound impact on ICHRA. Let’s take an early look at how these candidates and their party platforms might influence the ICHRA market going forward. 

Tax credit complications

Before diving into the candidates and their platforms, there is an imminent issue in Congress that could affect the market regardless of who is in the White House: the expiration of enhanced tax credits in 2025. The Inflation Reduction Act, enacted in 2022, extended tax credits first established in the Covid-19 Stimulus Package; those tax credits increased subsidies for low-income households, extending coverage to an estimated 2.5 million people. The tax credits were a key driver of the individual market’s growth from a paltry 14.1 million people in 2020 to more than 21 million in 2024. 

In general, Democrats have favored continuing the increased tax credits, while Republicans are more likely to allow them to sunset. If the tax credits go away, it’s likely that many people — particularly those in good health — will drop their ACA plans due to high costs and seek out alternatives. When the individual market shrinks, it reduces the competitiveness and quality of individual plans, detracting from the appeal of ICHRA.

On the other hand, the loss of these tax credits means that employees (particularly those doing hourly work) would benefit from receiving tax-free dollars from their employer since they would no longer be eligible for government tax credits. We may see employers that are currently hesitant to implement a health reimbursement arrangement (HRA) come back to ICHRA or QSEHRA (the program designed specifically for small businesses) to support their employees.

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