Enrollment in HSAs Up
Enrollment in high-deductible plans that qualify for health savings accounts tripled to three million over the last 10 months, according to a study released on Thursday by America's Health Insurance Plans, the Los Angeles Times reports (Havemann, Los Angeles Times, 1/27). The study is based on responses from AHIP member companies, including nearly all of the companies that offer HSA-eligible plans.
According to Karen Ignagni, AHIP president and CEO, the study's preliminary findings also indicate that the market for HSAs is becoming broader as companies are making them available in more markets and to a wider array of large and small groups, as well as individual customers, CQ HealthBeat reports (Carey, CQ HealthBeat, 1/26).
Grace-Marie Turner, president of the Galen Institute, said that HSAs are new, adding, "It takes people a while to get used to them."
Paul Fronstin, a health economist with the Employee Benefit Research Institute, said, "Is it a success story? Yes and no," adding, "Three years ago, the market didn't exist. But it still amounts to only a fraction of Americans who have private insurance."
There are 198 million privately insured U.S. residents, according to the Los Angeles Times.
President Bush has indicated that in Tuesday's State of the Union address, he will ask Congress to expand HSAs, which he has said benefit those with comprehensive health insurance by encouraging them to make more cost-effective health care decisions (Los Angeles Times, 1/27).
In related news, the New York Times on Friday looked at how "[b]anks, credit unions and money management firms are ... quietly positioning themselves to become central players in the business of health care, ... hoping to capitalize on the latest wrinkle in medical care paid by consumers: health savings accounts."
According to the Times, financial institutions are "drawn by the promise of lucrative fees they can generate by offering consumers mutual funds ... as their account balances grow." Banks and other financial institutions charge about $50 to $75 to set up an HSA, as well as about $40 per year in maintenance charges or service fees, the Times reports. More than 300 financial service companies now facilitate HSAs, compared with only seven small banks that offered the plans two years ago, according to the New York Times.
The accounts are lucrative for banks even without investment management fees, because banks make money from payment processing each time a customer uses a HSA debit card at a physician office, according to Daniel Kelly, manager of HSA services at U.S. Bancorp.
According to a DiamondCluster International study, about 15 million U.S. residents -- or 10% of all those insured -- will have an HSA by 2010, and payment processing alone could generate about $2.3 billion over the next five years (Dash, New York Times, 1/27).
PBS' "Nightly Business Report" on Thursday reported on HSAs. The segment includes comments from Michael Cannon, health policy director at the Cato Institute; Glenn Hubbard, former chair of the Council of Economic Advisers and dean of Columbia Business School; and Alex Soto, president of InSource, an independent insurer that sells and uses HSAs (Gersh, "Nightly Business Report," PBS, 1/26).
The complete transcript is available online.