“Great growth rate, small numbers,” is how Centene CEO Sarah London described enrollment in its ICHRA business last month, during the insurer's earnings call.
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| ICHRA, or individual coverage health reimbursement arrangements, are a new-ish way for employers to finance health insurance. Instead of providing a traditional group health plan, companies contribute pre-tax money to these accounts so workers can buy coverage on their own in the individual market. |
| But adoption has been slow since ICHRA (pronounced "ICK-ruh") first became an option in 2020. At Centene, roughly 50,000 people are enrolled through those arrangements. That's 2.5 times more than the year prior. But it's still less than 1% of the company’s total insurance membership. |
| Employers are wary of big benefit shifts, and there hasn't been a ton of awareness of the ICHRA option. Plus, there have been some operational and technical issues with the model. One problem is this: Over the past several years, dozens of companies, fueled by VC funds, popped up to help employers move to ICHRAs. To enroll these workers in plans, each vendor has to send enrollment and payment information to the insurer, and each insurer wants it differently. It’s a headache, and it makes it hard for administrators to scale. |
| “All the ICHRA platforms that are emerging are dealing with this same challenge, where it's kind of a mess under the hood,” Kyle Estep, an ICHRA expert, told me. |
| Estep is the CEO of a new company just launched to fix that problem. Called ICHRAx and backed by health insurer Oscar and administrators such as Take Command and zizzl, it’s meant to help with the backend of ICHRA administration, which has been like the Wild West, Estep explained. |
| ICHRAx will act as a data exchange layer between administrators and health insurers. Instead of having to integrate with each insurance company, administrators will send data to ICHRAx to pass along. Insurers will plug into ICHRAx, connecting them to the administrators. The effort is also meant to get the industry to agree on some enrollment and billing standards. It goes live in a couple of weeks. |
| Estep told me he doesn’t think these back-end data exchange problems have been a huge dampener on ICHRA’s adoption so far. I’ve reported on other challenges it’s facing, like premium increases in the individual insurance market. But as momentum behind the ICHRA concept picks up, “if we don't start working on this now collectively and start to figure out these standards in
the years ahead, it will ultimately become a rate-limiting factor of how far this market can go,” he said. |
| It’s fascinating to see competitors come together to address an issue they all have a vested interest in fixing. Time will tell if it works. |
| - Shelby |
