Why Health Insurers like Oscar and Centene are investing in ICHRAs: What this means for employers

Why health insurers like Oscar Health and Centene are investing in ICHRAs and what this means for employers

Interest in individual coverage health reimbursement arrangements, or ICHRAs, is on the rise among insurers and employers. In 2024, adoption of ICHRAs grew 29% among qualifying businesses, according to the HRA Council's 2024 Growth Report.

This rise in interest has captured the attention of employers and insurers, who are standing up and taking notice—including Oscar Health and Centene.

The CEOs of Oscar Health and Centene both made public statements on investor calls regarding the future of ICHRAs and their long-term viability. Read on to learn why this matters to employers and employees using ICHRAs.

The appeal of ICHRA

Despite being relatively new, ICHRAs are attractive to insurers and employers, particularly for their cost-control benefits and customizable solutions.

In 2025, employers can expect healthcare costs to rise up to 9%, according to SHRM. Some employers see ICHRAs as a cost-saving measure that doesn't sacrifice coverage. Because ICHRAs are a monthly stipend, the overall cost can be more predictable and controlled. For example, when private liberal arts school Lycoming College transitioned to ICHRA, the school saved $1.4 million in health care costs the first year. Employees saved an average of $1,200 on premiums.

ICHRAs are not only helpful in controlling costs, but they can also be a tool for customizable care. Because employees shop the marketplace with their employer-offered stipend, they're picking the care that fits their needs best instead of the other way around. This customizable solution has the potential to save employees money while getting a plan that feels tailor-made for them.

Breaking down Oscar Health and Centene's earnings calls

Both Oscar Health and Centene's Q1 2025 earnings calls revealed impressive financial performance and continued commitment to ICHRAs as part of their strategic growth. Here are the biggest takeaways from their latest reports.

Oscar Health Insurance

In its Q1 2025 earnings report, released on May 7, 2025, Oscar Health announced exceptional results. Total revenue reached $3 billion, representing a significant 42% increase year over year. The company reported a net income of approximately $275 million, an impressive $98 million improvement over the prior year.

A major driver of this growth has been Oscar's membership expansion, which reached approximately 2 million members, a 41% increase year-over-year. Oscar also improved its operating margin by 110 basis points to 9.8% and achieved its lowest SG&A ratio in company history at 15.8%.

During the Q1 2025 earnings call, Oscar Health continued to emphasize its strategic focus on ICHRAs. This builds upon CEO Mark Bertolini's vision shared at their June 2024 investor day, where he highlighted that "if all employers with less than 1,000 employees adopted ICHRA models today, Oscar's targetable market would grow from 21 million addressable lives to 96 million lives." The company has also previously announced plans to introduce new ICHRA products specifically designed for members accustomed to "richer plans," including extra benefits and health savings account compatibility.

The strong Q1 results further validate Oscar's strategic focus on expanding ICHRA enrollment across various markets, as previously mentioned in their Q4 2024 earnings call when Bertolini noted:

Looking at previous statements from Bertolini, this growth may not be a surprise. In an appearance on CNBC's Squawk Box in December, Bertolini predicted ICHRAs could replace traditional employer-sponsored group health plans.

"Our plans are meeting consumer demand for choice, transparency, and affordability, a value proposition that drove new employee initiations and open enrollment. We introduced new services with [ICHRA] platforms, including convenient shop, buy, and enroll solutions, and personal care guides to welcome employees to Oscar. We will build on this momentum in 2025 and introduce more solutions for employers and employees."

Centene Health Insurance

Centene's Q1 2025 earnings report, released on April 25, 2025, showed equally impressive performance with premium and service revenues growing 17% year-over-year to $42.5 billion. The company reported adjusted diluted EPS of $2.90, representing a 28% increase from $2.26 in Q1 2024.

CEO Sarah London reiterated the company's full-year 2025 adjusted diluted earnings per share outlook of greater than $7.25 and expressed continued confidence in Centene's growth trajectory. During the Q1 2025 earnings call, London specifically mentioned ICHRAs when discussing the potential expiration of enhanced premium tax credits, noting that "the criticality of these tax credits for Republican voters, small business owners, and our existing rural health care infrastructure, as well as the potential of the individual marketplace to serve as a platform for ICHRA growth, has taken root for many Republican congressional leaders." This statement underscores Centene's continued view of ICHRAs as a key strategic growth opportunity.

Most notably, London mentioned how new state legislation was driving ICHRA enrollment in Georgia, which aligns with Centene's view of ICHRA.

Centene's Q1 results showed particularly strong growth in their Marketplace membership, which increased 29% compared to Q1 2024, while their Medicare PDP membership grew by 22%. The company also secured important contract wins in Nevada for Medicaid managed care and the Marketplace public option, as well as in Illinois for dual-eligible services.

Centene's strategic hiring of Alan Silver as President of Ambetter Health Solutions in January 2025, specifically focused on ICHRAs, further demonstrates the company's commitment to this approach. London's previous statement that "large-scale ICHRA adoption will be a journey of several years" indicates Centene's long-term vision for growth in this space. She has also specifically mentioned ICHRAs in relation to the company's M&A strategy, stating in a February 2025 earnings call: "I would say ICHRA is a place that we are very interested in and thinking about what market may need, relative to overall infrastructure, and how we could support that through various partnerships and investments."

Why employers should pay attention

What does an insurer's earnings call mean for your organization's coverage? There are plenty of benefits for employers when it comes to increased carrier participation in ICHRAs.

• Choices and competition. With more carriers offering ICHRA-eligible plans in different states and marketplaces, employers will have more choices. More choice typically comes with more competition, which in turn could lead to better pricing.

• Availability. While ICHRA adoption is soaring in available markets, its availability varies by region. The more large insurers talk about ICHRAs, the higher the likelihood of greater regional availability of ICHRA-friendly plans.

• More tools and technology. As ICHRA adoption grows, we can expect more innovation in the space, including tools and technology to help manage plans such as ICHRA administration tools and integrations like Thatch's API with QuickBooks.

The future of ICHRAs: A cost-effective scaling strategy

The latest Q1 2025 earnings reports from both Oscar Health and Centene clearly indicate that ICHRA adoption continues to grow rapidly. The impressive revenue growth and membership increases reported by both companies validate their strategic focus on ICHRAs as a key component of their long-term growth plans.

With Oscar Health achieving a 41% year-over-year membership increase and Centene seeing a 29% growth in Marketplace membership, these companies are demonstrating that ICHRAs play a vital role in their plans for sustained, profitable growth due to the predictable cost-control benefits for businesses of all sizes and the flexibility they offer to employees.

Considering the priority Centene and Oscar Health have placed on ICHRAs, as evidenced by their Q1 2025 earnings reports, it would not be surprising to see other insurers follow suit, offering ICHRAs as state legislation changes to accommodate them in local marketplaces.

Interested in how an ICHRA could transform your organization's coverage? Book a demo with Thatch's team today to learn more.