Did Trump just save ObamaCare? Final HRA rule is a rare bipartisan win for American workers

The president recently made it easier for employers to offer help to workers in getting health insurance, while giving employees more choice of health coverage options outside of traditional employer benefits. Let’s be clear: employers want to offer health coverage options to their workers – whether for reasons of decency and compassion, or simply good business sense.

The problem has been how. Increasing regulations have led to insurance options with limited choices and ballooned costs. Large companies have the resources to keep up, but small businesses, which employ nearly half of America’s private workforce, struggle with the costs and complexities of offering health coverage and staying competitive.

Consider that, today, about 80 percent of small business owners say they remain worried about the cost of health coverage. What’s more, over the last 15 years the cost to cover one employee under small group health insurance rose nearly 200 percent — from $2,196 to $6,435.

While a multitude of factors are to blame, it’s clear the “one-size-fits all” model for group plans — where the boss chooses a plan and employees get to choose from one or two flavors of it — is at a breaking point.

But it wasn’t always this way. In 2002, the George W. Bush administration wisely acted to give employers and their workers another tool to manage health expenses: Health Reimbursement Arrangements or “HRAs” for short.

These are tax-free, employer-funded accounts that employees can use to pay for medical costs and, more recently, monthly premiums for a health insurance plan they select on their own.

As leaders of a broad-based coalition advocating for health care choice and competition in Washington, D.C., (White) and an industry disruptor administering personalized HRA benefits for thousands of workers nationwide (Hooper), we fundamentally believe in the flexibility that HRAs provide.

HRAs give employers a way to help those they depend on without entangling themselves in the confusion of health benefit designs. Similarly, they afford employees a vehicle to manage health expenses without relegating them to a one-size-fits-all plan that someone else selected on their behalf.

The Affordable Care Act’s (ACA) intentions of creating an individual marketplace would have seemed to bolster this model of insurance. Unfortunately, Washington’s red tape got in the way.

In 2014, regulators at the IRS got hung up on their interpretations of how an HRA should be treated under ObamaCare’s rules, and began threatening penalties of up to $36,500 a year per employee for businesses that offered HRAs to their workers in lieu of a small group plan – that’s 18 times the penalty for dropping coverage altogether.

At Take Command Health, we (Hooper) witnessed the carnage in the market first-hand. Small employers who were genuinely trying to help their employees pay for coverage were suddenly faced with penalties that were worse than if they did nothing. HRAs had become commonplace, but now were being removed by regulators in a dark room.  

And at the Council for Affordable Health Coverage, we (White) mobilized the opposition that successfully overturned this policy with a provision tucked inside the 2016’s bipartisan 21^st Century Cures Act that created the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA). While this was a good start, QSEHRAs were limited in what they could do.

Last month, the Trump administration built on those efforts by issuing a final rule to further expand HRA plans – extending their availability to businesses of all sizes and ensuring that they can be used to purchase individual health coverage, within or outside of the ObamaCare markets.

Treasury Department estimates show that the rule, which creates the new Individual Coverage HRA and the Excepted Benefit HRA, could benefit more than 11 million workers and family members, including some 800,000 Americans who were previously uninsured. Take Command Health has estimated that these numbers could be even higher – closer to 50 million.

The irony? President Obama struggled to reach enrollment targets in the individual market and President Trump has been portrayed as seeking to undermine it. With this policy, however, HRAs will now allow employees to purchase coverage on the individual market – boosting enrollment and driving healthy market competition. In this, it supports a key goal of the ACA: protecting more Americans from going it alone in managing their health care costs.

For employees at a workplace offering HRAs, the administration’s rule means the opportunity to make coverage decisions based on their needs and their pocketbook, rather than based on the decision of their employer.

For the 80 percent of workers at firms offering health benefits that still provide an “option” of only one health plan, it means a welcome opportunity for change.

And for employers, this regulatory clarity expands options and lifts the threat of punishing fines simply for offering choices in health coverage to their workers.

What’s more, the administration’s rule includes important guardrails to prevent adverse selection and protect those with preexisting conditions.

Empowering employers and employees with policies that allow them to make their own coverage decisions is the first step in repairing our insurance markets. The diverse cross-section of workers and families that we reach through our combined efforts on a daily basis tells us this is precisely the shock to the system that the health care marketplace needs.

On behalf of the millions helped by this rule, we’re glad that Washington is starting to feel the same.

Joel White is the president of the Council for Affordable Health Coverage, a broad-based alliance with a singular focus on bringing down the cost of health care for all Americans. Jack Hooper is the co-founder and CEO of Take Command Health, a market leader in Qualified Small Employer HRA (QSEHRA) administration and an advocate for Individual Coverage HRA (ICHRA).