“Creative destruction is hard in any industry and insurance has a poor history of it, but anyone with a lot of employee benefits revenue not thinking about the ICHRA market could find they are waking up too late.” – Sam Melamed
By Sam Melamed
1. The ICHRA market is definitely real and growing. The HRA Council report shows rapid and continued growth in 2024 with the largest growth coming from companies with more than 200 employees
2. The stability of the individual markets is the #1 most important factor to continued growth and the biggest open question is if the premium subsidies that are set to expire will be extended or not. Failure to extend would really hurt the ICHRA market. There does seem to be bipartisan support for extending the subsidy in exchange for extending the Trump tax cuts, but that doesn’t always mean a deal works out
3. The recent KFF Health News report showing poor network density in ACA plans will scare some potential entrants away. Interestingly, the network density is a much bigger issue with the lowest cost Bronze plans, but most ICHRA buyers actually choose gold and silver plans that often have stronger networks
4. The new regulations from CMS that allow states to include adult dental as an essential health benefit will have a further impact on the ICHRA market, as subsidies will apply to the dental benefits embedded, which will make for richer benefits available in the exchanges
5. Every CEO that I know would love to get away from offering group health insurance and carrying the persistent risk that their rates skyrocket. Every. Single. CEO!
6. The projected rate increases in the commercial group health markets this year are going to drive a lot more companies to look at ICHRA. Despite the reported average increases, the distribution curve means that half of all companies have above average increases and many of them truly prohibitive
7. Several of the top ten brokerages in the country have bought direct to consumer health insurance agencies recently, with the ability to manage group breakups into ICHRA as one of the biggest pieces of accretion. Creative destruction is hard in any industry and insurance has a poor history of it, but anyone with a lot of employee benefits revenue not thinking about the ICHRA market could find they are waking up too late
8. The software and services market for ICHRA appears to me to be too fragmented and needs some significant consolidation to occur in order for scalability to work. I would not be surprised to see a couple PE roll-up shops make a hard run at that even as more companies enter the market
What do you think will happen with ICHRA?
