The Most Interesting Idea We Heard at HLTH2024: ICHRA & Medicaid?

This past week at the HLTH 2024 conference, ICHRA was a key topic. One of the most discussed conversations featured Oscar CEO Mark Bertolini and prominent healthcare investor and journalist Chrissy Farr. They envisioned a future where personalization and portability are standard. A particularly provocative point was the definition of “individual coverage.” Currently, ICHRA covers ACA individual plans and Medicare, but what if it also covered Medicaid?

We found this question fascinating and took a moment to explore it.

How Would It Work?

First, there would need to be a mechanism for employers to pay for Medicaid. While Medicaid is free in most states, a few—including Indiana, Arkansas, and Georgia—charge nominal premiums. These premium payments offer an opportunity for employers to fund Medicaid in a manner similar to how ICHRA is used for ACA insurance and Medicare. In other states, policymakers would need to create a system for employers to contribute to Medicaid. For example, could ICHRA funding be harnessed to allow employers to pay insurance carriers premiums (in lieu of the premiums they currently receive from the state)? States currently pay a monthly per member (age/sex/eligibility category specific) to Medicaid managed care plans.

What Would Be the Impact?

Assuming we can navigate the “how,” and ICHRA can pay for Medicaid premiums, what would the impact be? Employers might see lower costs. Medicaid premiums tend to be lower for moms and babies. Lower-income employees might benefit from reduced financial barriers. Many employees find it difficult to afford monthly payroll deductions, let alone deductibles, co-pays, and out-of-pocket maximums. Expanding ICHRA to cover Medicaid could alleviate this pain point.

Currently, Medicaid-eligible employees can also enroll in ACA plans, where ICHRA funding from their employer comes into play. However, this scenario is rare. For example, in California, where the minimum wage is $16 per hour, a full-time employee would earn $33,280 and wouldn’t qualify for Medicaid. Conversely, part-time workers may qualify for both ICHRA funding and Medicaid, but these intersections are limited.

What’s the Catch?

This proposal requires a significant redefinition of Medicaid, which merits examination and debate. Our team reacted strongly against the idea of introducing premiums for Medicaid. KFF has noted that states introducing such premiums often experience worsened health outcomes and minimal economic gains. Additionally, there are concerns about the incentives created for employers regarding worker compensation.

That said, we sense that there’s more to this proposal than meets the eye. Or perhaps we misinterpreted Mark and Chrissy's convo entirely. In that case, consider this article an audacious thought exercise. We believe the future is shaped by bold ideas, and we’re intrigued by proposals that help both employers and employees access quality healthcare at better price points.