Trump HRA Proposal Surprisingly Substantive, Says Obama Admin Official

While the president has undermined the ACA's individual marketplace, his HRA expansion proposal would transition a projected 10.7 million people into these plans in the next decade.

A proposed expansion of the health reimbursement arrangements (HRA) program announced this week by the Trump administration provides surprisingly robust protections against adverse selection, according to a former Obama administration policy wonk.

"What leapt off the page for me after reading the proposal was how much they cared about protecting the individual market from adverse selection," says John Barkett, who served in the Obama administration's Office of Health Reform.

"They were very concerned about putting this rule out in a way that wouldn't let employers send their sickest workers into the individual marketplace," he says.

"For example, they require employers to only offer this or to offer their traditional group coverage. You can't do both," says Barkett, now senior director of policy affairs at Willis Towers Watson. "If they wanted to create a way for employers to keep their sickest people on their own plan and send other employees out to the individual market, they wouldn't have put that requirement."

Barkett says he was also struck by the Treasury Department's estimates that average premiums will change by less than 1% as a result of the projected 7.5 million people transition to the individual market under the new HRA.

"Adding 7.5 million people and having no change effectively in premiums shows that they don't necessarily agree with the idea that the sickest people only are going to be the ones who are going into it," he says.

The administration's efforts to expand the individual market appear at odds with its simultaneous efforts to undermine the individual markets. That effort includes draconian funding cuts to the "navigator" enrollment program, virtually no budget for advertising, and the introduction of cheaper, less-comprehensive short-term insurance plans.

"I know. I know. I'm having a hard time understanding it," Barkett says.

Undermining the Marketplace
 

Critics have contended that the proposal could allow employers to push their sickest employees into Marketplace plans. Barkett says those fears are "simplistic."

"It's not a slam dunk to just say the only people moving are the ones who have the sickest people," he says. "There are some countervailing forces that will prevent a lot of employers who do have, on average, sicker populations from taking on this model."

"Employers are not monolithic," he says. "Some have employees that remained at their company for a long time, and those employers invest heavily in the health and well-being with generous benefit plans that cost a lot of money. Other companies employ people for not that long and there aren't great returns to justify heavily investing in their employees' health and well-being."

Payers and Providers
 

"Treasury estimates that by 2028, 10.7 million people would be getting individual coverage," Barkett says, which could reinvigorate interest in the marketplace plans among payers and providers.

Those estimates include 6.8 million people shifting from group coverage to individual coverage, 800,000 uninsured people who now have access to coverage, and 3.8 million who were in the individual market already but now they have the employer option.

"That's a lot of people," Barkett says. "That's another 7 million customers that insurance companies could pursue. That's a lot of premium dollars, if you think about the typical person maybe spending $7,000—$10,000 a year on healthcare. Multiply that by seven-and-a-half million new customers and that markets growing by tens of billions of dollars. Does United Healthcare or Humana look to get back into that market?"

Individual plans usually have narrow networks, and Barkett says many providers have stayed away because of low reimbursements. That may have to change, he says, if the individual market hits the growth numbers projected by Treasury.

"They might feel more compelled to contract with insurers who provide individual coverage," he says.

Own your Plan
 

Barkett praised the proposal's call to let employees "own" their coverage.

"If an employee who get his coverage through the individual market with an HRA leaves the job, your HRA goes away but your health care coverage doesn't. If you want to keep paying your premium out of pocket you can," he says. "That's a that's a sea change in U.S. healthcare, where normally leaving your job means disrupting your coverage."

"Let's go a step further," he says. "What if you move from one job that offered this type of benefit to another job that offered this type of benefit? Then you really could stay in your plan, replaced one HRA way with the other, and you're not having to change doctors."

"Your insurance company doesn't have to write off the investments they're making in you because they know you're going to change jobs in a couple of years," he says. "They can realistically look at you as someone they're trying to keep as a customer for life. That's a different approach than insurers have taken in the past."

Partisan appeal
 

Barkett says the HRA proposal may not be see the sort of blistering partisan opposition that other Trump Administration healthcare reforms have faced, in part because there are components of the proposal that appeal to Democrats and Republicans.

"This is not an issue that falls neatly into ideological storylines," he says. "It would give the Affordable Care Act side of the House more lives the individual market and not necessarily just sick people. It would give the conservative healthcare side policies that they've been pushing for a long time, like flexibility, portability, and competition.