Individual coverage health reimbursement arrangements, recently rebranded to CHOICE, could boost individual ACA enrollment by up to 7.6% in some states while having little effect in others, according to an October analysis from actuarial consulting firm Wakely.
The benefits model allows employers to give workers a set allowance to purchase individual coverage on or off the exchange instead of offering traditional group plans. Wakely modeled what would happen to the individual ACA market if small group employers in three states switched to CHOICE under varying cost-savings scenarios.
Six notes:
- In South Carolina, where individual ACA premiums are projected to run below small group rates in 2027, individual market enrollment could grow by 2.4% to 7.6% depending on the savings threshold employers need to switch.
- In Iowa, where premiums between the two markets are almost the same next year, the projected enrollment impact was 0.3% or less. In Tennessee, where individual ACA premiums exceed small group rates by at least 50%, there was no meaningful adoption predicted.
- If small group populations enter the individual market broadly, risk pools could improve modestly. But if the healthiest employer groups opt for level-funded products instead of CHOICE, individual ACA morbidity could worsen.
- The analysis assumed a $50-per-employee monthly administration fee, which nearly erased the premium advantage in Iowa and would further limit adoption in states where the gap between individual and group rates is narrow.
- The analysis covered only small group ACA employers, which represent about 10 million members nationally. Fully insured large group and self-funded plans cover roughly 165 million combined, and some large employers and state employee health plans are already exploring CHOICE.
- Reliable enrollment data barely exists for the CHOICE market, and there is no federally-backed estimate. The HRA Council, an industry group, has estimated at least 500,000 people were enrolled in the model this year, but that figure could be an undercount.
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