ARLINGTON HEIGHTS, IL (June 14, 2019) – The Heartland Institute applauds the Health Reimbursement Arrangement (HRA) rule set forth Thursday by the Department of Health and Human Services.
These new rules create the Individual Coverage HRA and the Excepted Benefit HRA. The Individual Coverage HRA allows employers to provide tax-preferred dollars to employees to pay for purchases from the individual health insurance market. The Excepted Benefit HRA would cover specific medical expenses to employees in a group plan.
These new HRA rules benefit employees with more healthcare choices and competition. These new benefits allow small and mid-size companies to provide benefits they would not otherwise be able to afford.
The following statements from health care policy experts at The Heartland Institute – a free-market think tank – may be used for attribution. For more comments, refer to the contact information below. To book a Heartland guest on your program, please contact Media Specialist Billy Aouste at [email protected] and 312/377-4000.
“The current rules favoring employer-sponsored insurance have been in dire need of reform for years. The existing federal tax exclusion for employer-sponsored insurance has essentially forced employees to give up a substantial portion of their income to their employers and give them control over what their health care plan will be. This limits competition and relinquishes the ability to choose what an employee may want to see in his or her health plan.
“The new effort by the Trump administration to expand the use of health reimbursement arrangements (HRAs) will end this penalty and give employees control their own health care dollars. Starting in 2020, workers will have more flexibility to choose health care plans that will move with them if they leave a job. It will be especially helpful for small businesses, who will now be able to offer coverage without joining a group health plan. That creates far less hassle and red tape, making those jobs more appealing to jobseekers.
“While full health savings accounts should be the ultimate reform goal – as they truly give workers the greatest control over their health care dollars – HRAs are a dramatic improvement over the current system and could signal the move away from employer-sponsored care and towards real consumer choice and control in health care.”
“Providing employers and employees more health-insurance freedom is a step in the right direction. This approach of increasing competition has the potential to hold down the rapidly increasing health-insurance market prices or even begin to lower them. Creating more consumer choices is always a better approach than a single-size-fits-all government-run system.”
“This is significant reform in two ways. First it will give smaller employers more flexibility in attracting workers because they’ll now be able to offer some contribution to employee health care without being hamstrung by full-ride, expensive health insurance plans. Many have chosen to not offer this benefit, or find ways around it by hiring independent contractors rather than a full-time employee.
“Second, it gives employees more choice in determining the best insurance benefit for them. They can shop for their own arrangement, perhaps using the accounts to spend on lower-cost Direct Primary Care plans, or supplement co-pays for a spouse’s full-ride insurance plan. This will be a game changer in the health care market: more choice, more competition and with hope, better prices.”
The Heartland Institute is a 35-year-old national nonprofit organization headquartered in Arlington Heights, Illinois. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our website or call 312/377-4000.