TLDR:
- ICHRA, or Individual coverage health reimbursement arrangements, is gaining popularity and is expected to have two million enrollees by 2032.
- Venture capital firms, like QED Investors, are looking to invest in the emerging ICHRA space due to its growth potential and advantages.
Individual coverage health reimbursement arrangements (ICHRA) are on the rise, with projections estimating two million enrollees by 2032. This emerging insurance option, introduced in 2020, offers employers the ability to set defined monthly contributions for employees to choose health plans through the Affordable Care Act marketplace.
Venture capital firms, such as QED Investors, are showing interest in ICHRA due to its growth potential and advantages. These advantages include ensuring continuous coverage not tied to employment status, giving individuals more control, increasing competition in the insurance marketplace, and allowing tax-free reimbursement for premiums and expenses. However, ICHRA also comes with limitations such as limited networks and confusion over the best insurance choices for individuals.
The ICHRA market is currently crowded, with companies like Oscar Health and Centene entering the space. Various startups in the field are backed by multi-million dollar funding rounds from VC firms like a16z, GV, GSR Ventures, and more. Despite the current competitive landscape, some are speculating that ICHRA’s success could lead to systemic changes in the insurance industry, potentially laying the groundwork for a single-payer system in the future.
