In 2016 I predicted that an individual health policy would be an eligible pre-tax expense by 2020. On January 2020, the Individual Coverage Health Reimbursement Account (ICHRA) was enacted, and employees for the first time in 75+ years could buy an individual policy with pre-tax dollars if their employer adopted an ICHRA.
In 2022 and again when interviewed in 2023 by the Freedom Hub Working Group ICHRA: The Key to Consumer Healthcare Empowerment (rumble.com) I said the ICHRA did not go far enough. An ICHRA still leaves the employer in control of adopting the ICHRA. We need to adopt ICHSA’s, making the premium of an individual health insurance policy an eligible expense under a Health Savings Account. An ICHSA would take control from the employer and give it to the employee.
I am not saying I am Nostradamus here or care to take credit for predicting change. I do believe it is important to look at the market and do a business risk assessment if you are in the benefits business. I wrote about this with my article, “A Zombie Movie and the Relationship to Trump’s HRA Changes“.
My belief, which I also believe is shared by the majority in Washington, is that it is our employer health insurance financing system that is driving up the costs of the underlying markets. Much like college education, the financing system drives the price of the product, not the other way around. If you give an 18-year-old who has no job and no assets $50,000 per year to purchase college, colleges will become country clubs. In health insurance, our financing system denies employee choice and therefore we do not have a true consumer market driven system. Our employer-based financing system is the root cause of health care cost inflation because it denies consumer choice that we have for almost every other product we buy in the U.S.
The ICHSA is now on the horizon. The Personalized Care Act, proposed by a group of Republicans (See article here: https://www.washingtonexaminer.com/news/senate/ted-cruz-seeks-expand-accessibility-healthcare-savings-accounts ) would make the premium for the purchase of an individual health insurance policy an eligible expense under an HSA, thus making the purchase a pre-tax expense.
If this happens employer-based insurance is over. Younger people working for many companies would be able to buy insurance on the individual markets often at prices lower than what their employee contribution is today for a group plan. Those under 30 could buy Catastrophic coverage at even lower costs. Young people leaving the employer risk pools would cause a death spiral driving up the costs for those who remain on an employer plan. Other employees would simply ask employers to give them the contribution they would have given them for health insurance in their pay, so they could buy a plan. Employers who don’t provide contributions for dependent coverage would result in almost all dependents, particularly younger ones, going to the individual markets.
I would add that I think most employers and employees would want this. Very few employers want to be in the middle of health insurance. I have written in the past that this is a misplaced responsibility.
This is a much-needed change and will begin the process of reconstructing our health care financing and underlying health care pricing system. Consumer choice should drive down costs, requiring the system to operate more efficiently to maintain profitability. This system is much like the Bismarck System used in other countries. The U.S. is not blazing a new path here.
Mike Pires and I started Enrichly (www.getenrichlyhr.com) anticipating this market shift. It is our belief that current benefits programs aren’t very beneficial for most. Employers want to help their employees, not impose high health insurance costs on them from ever growing employee contributions. Our Enrichly program is designed to enrich employee’s lives. By allocating existing benefit dollars in a different and more efficient way, we think employers can create more value for all their employees, not just those who are high health care utilizers.
JOE MARKLAND 
Why do you think the employer market has such high costs? It’s due in large part to the fact that when health care providers, PBMs, carriers, etc., cannot make sufficient dollars via the Exchange or government-based plans, they look to employers to defray the cost. If/when employer-based plans are no longer an option, the cost of plans on the Exchange will rise dramatically. Obviously, our system of health care is awful. It’s expensive, complicated and can provide terrible outcomes for the spend. But suggesting a wholesale use of the Exchanges and not assuming the premiums will increase despite additional participation is a non-working thesis.
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I think the employer market has high costs because our financing system drives the underlying markets. That is a core argument in my article so you must have missed it. If the employer market is no longer around then the market will have to respond to consumer demand which will make them be more efficient and drive down costs like other consumer markets. My thesis is actually practiced in other countries where true consumer markets have resulted in lower costs. Our employer-based system also has a large administrative component that if we reduce the costs, everyone can win. For example, the cost to manage plans on the individual market is less than the employer market. That savings can go into actually providing care or into people’s pockets.
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