Over the past two presidential administrations, the healthcare market has undergone significant changes, particularly with the introduction of the Individual Coverage Health Reimbursement Arrangement (ICHRA). Launched on January 1, 2020, ICHRA enables employers to provide a monthly, tax-free allowance to employees, allowing them to purchase health insurance on the individual marketplace.
While healthcare policy remains a highly partisan issue, ICHRA has found broad bipartisan support due to its practical approach. However, the broader healthcare agendas of a potential second Trump administration or a Kamala Harris presidency could significantly impact the ICHRA market. Let’s explore how each candidate’s platform could shape the future of ICHRA and the healthcare landscape.
Tax Credit Concerns
Before delving into the candidates’ positions, there’s an overarching issue in Congress that could affect the ICHRA market, regardless of who occupies the White House: the expiration of enhanced tax credits in 2025. The Inflation Reduction Act of 2022 extended tax credits originally introduced through the COVID-19 stimulus packages, which provided additional subsidies to low-income families. These credits expanded coverage to an estimated 2.5 million individuals and drove the growth of the private market, which swelled from 14.1 million people in 2020 to more than 21 million in 2024.
Generally, Democrats are inclined to continue these enhanced tax credits, while Republicans are more likely to let them expire. If the tax credits disappear, many individuals—particularly those in good health—may choose to drop their ACA plans due to rising costs and turn to alternatives. This would likely shrink the private market, reducing competition and quality, which would in turn undermine the appeal of ICHRA.
On the other hand, the loss of these tax credits could make ICHRA more appealing, especially for hourly employees who would no longer be eligible for federal subsidies. This could prompt companies that have been hesitant to adopt Health Reimbursement Arrangements (HRAs) to consider ICHRA or QSEHRA (a program designed for small businesses), offering employees tax-free contributions for health coverage.
When enhanced tax credits were first introduced in 2021, many in the industry predicted that HRA adoption would decline as employees turned to more favorable tax credits. However, this didn’t happen, and ICHRA and QSEHRA adoption continued to rise. As long as the ACA market remains competitive—even without the enhanced tax credits—we can expect ICHRA to continue its upward trajectory.
Impact of a Kamala Harris Administration on ICHRA
Democrats generally support ICHRA as it helps expand the ACA marketplace by adding more participants, thereby enhancing competition and the risk pool. While Harris initially supported universal healthcare when she ran for president in 2020, her current position aligns with achieving “universal” coverage through a public option in the ACA marketplace. A public option would create a government-run plan competing alongside private insurers.
If the ACA market remains competitive, a public option could actually benefit ICHRA by providing workers with more choices, particularly in regions with limited private competition. However, any move toward a public option would require significant overhauls of the U.S. healthcare system.
A Kamala Harris presidency would likely be supportive of ICHRA’s expansion. However, there may be pressure from some left-wing groups that view ICHRA as a policy from the Trump era that needs to be reversed. These groups fail to recognize that ICHRA evolved from the Obama administration’s QSEHRA program. While these groups could influence a new Democratic president, substantial changes to ICHRA are unlikely.
Impact of a Second Trump Administration on ICHRA
Republicans have generally supported ICHRA because it aligns with market-based principles and offers more choices for employees. The Republican platform advocates for “promoting choice and competition,” which benefits ICHRA by allowing employees more flexibility compared to traditional group plans. Republicans also introduced the CHOICE Act, which codified ICHRA, signaling strong support for the program.
However, a second Trump administration could present long-term risks to the stability and growth of HRAs. A Trump White House, along with a Republican Congress, could renew efforts to weaken the ACA marketplace, upon which ICHRA depends for access to high-quality plans. Additionally, Republicans may seek to loosen ICHRA regulations, allowing it to work with non-ACA plans, which could destabilize the individual market and prompt Democrats to push for the reversal of ICHRA.
As with a potential Harris administration, ICHRA is likely to continue growing unless healthcare policies shift too drastically in either direction under a second Trump presidency.
Building on a Strong Foundation
Despite potential challenges, ICHRA and QSEHRA are continuing to grow and provide more Americans with access to quality healthcare. According to recent research by the HRA Council, ICHRA adoption grew by 29% from 2023 to 2024. More importantly, these HRAs are enabling many employers to offer healthcare benefits for the first time. The HRA Council report revealed that 83% of employers adopting ICHRA or QSEHRA had previously offered no healthcare coverage to their employees.
Regardless of whether Harris or Trump wins the presidency, both could enact policies that impact the trajectory of HRAs. However, by remaining committed to bipartisan principles and advocating for improvements, both candidates have the potential to enhance access to healthcare and support American businesses.
In conclusion, the future of ICHRA will depend on how the next administration addresses key issues such as tax credits, the ACA marketplace, and the broader healthcare framework. The direction taken by either a Harris or Trump presidency will shape the evolving role of HRAs in the U.S. healthcare system.