President Trump signed an executive order in late 2017 to increase the use of short-term, limited-duration insurance, association health plans, and health reimbursement accounts. All three of these options boosted the choices that individuals have who don’t get health insurance from work or struggle to afford current options. I wrote about health reimbursement accounts recently and discussed the positive impact this rule change could have on the individual market. A recent article in Stat News, written by Robert Wood Johnson Foundation senior policy adviser Kathy Hempstead, echoed some of the same points I wrote about:
The HRA rule is surely the pick of the litter. While short-term limited duration plans and association health plans take people out of the individual market, health reimbursement arrangements send them toward it. Short-term limited duration plans and association health plans are neither new nor exciting ideas. Both pre-date the Affordable Care Act and use a combination of cream-skimming — such as excluding less-healthy enrollees — and/or skimpier benefits to save a few dollars. The HRA rule, on the other hand, permits individuals to migrate from the group to the individual market and creates new opportunities for growth. If short-term health insurance plans are a broken bicycle and association health plans an adult tricycle, HRAs, while perhaps not a driverless car, are at least an electric scooter.
The HRA option has the potential to disrupt existing models of employer-sponsored coverage, in which employers are currently the customers. The rule permits employers to make defined contributions to their employees’ health insurance costs, while freeing them of the responsibility of purchasing a group health plan. It potentially gives employees more choice and transportability in their benefits.
Recall that many decried the Trump administration executive order as a sabotage of the ACA. But as I discussed in another recent research update, the people fleeing the ACA exchanges are the ones who would benefit directly from having additional products from which to choose.