The Individual Coverage Health Reimbursement Arrangement (ICHRA) has been hailed as a disruptive, employer-driven solution to rising healthcare costs. Yet, recent developments—especially its proposed transformation in Trump’s “Big Beautiful Bill” (“One Big Beautiful Bill” or OBBB)—are raising red flags. It’s time to recognize that ICHRA isn’t the panacea it claims to be—it might just be a different kind of problem.
1. What’s Driving the Latest Buzz?
ICYMI: ICHRA was introduced in 2020 via executive action, letting employers reimburse employees tax-free for individual health insurance. Early enthusiasm pointed to better individual choice, stable employer budgets, and potentially lower premiums from broader risk pool. Now, Trump’s OBBB bill would enshrine ICHRA in statute—renamed the CHOICE Arrangement—with further incentives: tax credits for small employers, pre-tax premium deductions, and expanded flexibility. Proponents call it a turning point.
2. “Refining Your Own Gasoline”: A Risky Metaphor
Imagine being told to refine your own gasoline: you might save money, but you also need a refinery, safety protocols, and expert handling—or face disaster. That’s what CHOICE Arrangements offer: flexibility with a license to self-service—but no guarantee you’ll avoid combustion.
- Appealing on paper: Employers set fixed budgets; employees pick their own plans. Sounds efficient.
- Hidden downside: It shifts complexity and risk onto individuals and employers who may lack the expertise and infrastructure to manage it effectively.
3. How OBBB looks like a Pig into a Dress
Trump’s bill dresses up ICHRA with attractive ribbons—tax credits, portability, pre-tax deductions—but keeps the pig underneath.
- Administrative burden: The laws regarding employee benefits mandate annual notices, compliance updates, and coordination with exchanges. Employers will still need deep HR and benefits teams.
- ACA disruption: By modifying subsidy rules and enrollment mechanisms tied to CHOICE Arrangements, the bill infuses new uncertainty into ACA markets. It could destroy the pools.
- Coverage erosion: As ACA subsidies shrink, more people risk losing coverage. CBO projects 11–16 million uninsured by 2034 under this bill. That’s the real danger.
4. Complexity Isn’t Innovation
Even as CHOICE Arrangements look sleeker, they add layers of complexity—including:
- Dual enrollment: Employers can offer group plans and CHOICE Arrangements to the same class—great on paper, but in practice? It adds enrollment confusion.
- Exchange volatility: Rewriting subsidy and enrollment mechanics midstream means major ripples in ACA platforms like Covered California.
- Unintended consequences: More hoops for employees to jump through—especially those with lower incomes or irregular work—can equal more gaps in coverage.
5. Why This Isn’t the Future—It’s a Detour
- It fractures ACA’s foundation. The ACA depends on a large, stable risk pool across enrollment windows and subsidy continuity. CHOICE Arrangements erode transparency, introduce enrollment discretion, and make market forecasts tougher.
- It transfers cost and risk. Instead of insurers and governments spreading risk, CHOICE hands it to employees—especially risky for those without benefits knowledge.
- It hides real problems. Instead of addressing rising healthcare costs and provider accountability, CHOICE offers a sidenote distraction—like polishing knobs while the engine leaks.
Final Take
ICHRA and its CHOICE evolution aren’t inherently bad—they may help some employers offer flexible benefits. Especially in states where there is a cavern between individual and group pricing. But Trump’s OBBB spins them as a cure-all while slicing into ACA, increasing administrative complexity, and likely exposing low- to middle-income families to spotty coverage.
At CorpStrat we are always watching and seeking strategies to reduce costs and solve for best delivery of benefit plans and offerings for employers.