The Trump administration has finalized a new rule that is expected to give an estimated 800,000 businesses another option to offer health benefits and 11 million workers and their dependents more options in obtaining health insurance.
The new rule governs Health Reimbursement Arrangements (HRAs) that will give employees new purchasing power to obtain health insurance policies outside their workplace and for employers to fund accounts to help employees purchase additional benefits they choose.
The HRA option is expected to eventually increase by 50% the size of the individual market, which has been decimated by Obamacare. It will allow insurers back into the market to compete for millions of potential new customers. And the consumer price transparency is expected to put downward pressure on the costs of coverage.
The action completes a trilogy of options that began with an executive order from President Trump in October, 2017 directing his administration to create new health care options for Americans by promoting choice and competition in the health sector—resulting in actions on short-term plans, association health plans, and now HRAs.
The new HRA rule is potentially the most impactful of the three. It could well transform the employer-based health insurance market in much the same way that 401(k) changed the retiree benefit world. It turns health benefits into a defined contribution rather than a defined benefit, just as 401(k)s did with retirement coverage…
Reprinted with permission from - Forbes - by Grace-Marie Turner