With pandemic-era Affordable Care Act (ACA) subsidies due to expire at the end of the year, health insurance alternatives could take advantage.
A June 11 report from global professional services firm Alvarez & Marsal (A&M) predicts that more beneficiaries might soon ditch insurance coverage for options like short-term, limited duration plans or healthcare sharing ministries (HCSMs), which aren’t regulated like health insurance and aren’t required to comply with ACA protections like covering maternity care or pre-existing conditions.
Craig Savage, A&M managing director and health plans and managed care practice leader, told Healthcare Brew that A&M has recently worked with “one of the larger” HCSMs—which he declined to name—to help the ministry scale in anticipation of more enrollment.
“They are really gearing up for growth in membership,” he said. “The market dynamics, the environment in which we find ourselves, I think, is going to lend itself to those health sharing ministries.”
Why now?
Health insurance policy changes proposed in President Trump’s “big beautiful bill” would impact millions of people, potentially sending them in search of a cheaper health plan alternative, Savage explained.
ACA subsidies are set to expire at the end of 2025, and neither the Trump administration nor Congress has yet moved to extend them. CVS Health’s Aetna is leaving the ACA marketplace, affecting about 1 million beneficiaries in 17 states—and more payers may follow.
Republicans in Congress have also proposed cutting Medicaid significantly or adding work requirements.
The Congressional Budget Office predicted on June 4 that the expiration of subsidies could cause 4.2 million people to lose health insurance coverage by 2034, and that further changes to Medicaid and marketplace rules could impact millions more.
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Savage also thinks it’s possible the Trump administration may expand flexibilities in some way for alternatives like short-term, limited duration plans—like he did in his first term, a move the Biden administration overturned.
“I think they will show greater flexibility in the structure and the requirements of these short-term duration products. I don't know how that will manifest itself,” Savage said.
Right now, enrollment in insurance alternatives is relatively low compared with more traditional options: In 2023, about 305.2 million people had health insurance at some point, according to the US Census Bureau, compared to at least 1.5 million in HCSMs, per a report from Colorado’s state insurance regulator.
The most recent enrollment count for short-term plans comes from a 2020 Democratic Committee staff’s oversight investigation, which found there were about 3 million people enrolled during 2019 across nine companies.
ICHRA growth
Savage also said that payers are promoting a type of plan that became available in 2020: individual coverage health reimbursement arrangements (ICHRAs), where employers give workers money to buy their own individual market plan through the ACA marketplace.
In contrast with short-term plans and HCSMs, these plans are governed by the Affordable Care Act and are required to provide minimum coverage for things like pregnancy and pre-existing conditions.
He pointed to Centene as an example. In a February call, the insurance company’s CEO Sarah London called ICHRA “the future of health insurance for working Americans.”
“I haven’t heard health plans…talk a lot about these short-term duration products as much as I’ve heard, you know, a Centene talk about ICHRA products,” he said.