I recently saw a news release that proudly proclaimed how a company “saved” more than $1 million in health insurance costs because it switched from a self-funded plan with some large ongoing claims to an individual coverage health reimbursement account (ICHRA). The expectation was that there would be “substantial savings … by transferring the risk of its high utilizers to the much larger individual market.”
An ICHRA provides employees with a stipend to purchase their own health insurance in the individual market. I put “saved” in quote marks because money really was not saved. The costs were actually transferred to others, who either directly or indirectly, bear responsibility for those ongoing claims. Some insurance companies are taking on the risk because the rules allow an employer to move a bad risk in the middle of a large claim to another insurance company on the individual health insurance marketplace.
