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May 24, 2008
Banks Offering More Health Savings Accounts
Customers have been asking financial institutions for Health Savings Accounts (HSAs), and according to a survey conducted by Wolters Kluwer Financial Services (WKFS), banks and credit unions are beginning to respond to those requests.
Experts say the increased demand comes from consumers who want more control over their health care. And those customers are using Health Savings Accounts to do just that.
"You're calling the shots," said Greg D'Angelo, a policy analyst with The Heritage Foundation's Center for Health Policy Studies. "You're deciding what services you're obtaining and what the terms are. It's more transparent. You're actually seeing where the money's going. You're more involved. It's more market-based in that sense."
Of the 1,200 financial institutions that responded to the WKFS survey, 62 percent offer Health Savings Accounts. One-third of the rest plan to begin offering them before this summer.
Benefit Consumer, Banker
The financial institutions surveyed told WKFS they are offering Health Savings Accounts because of increased consumer demand and because Health Savings Accounts generate new accounts, boost cross-selling opportunities, and increase revenue.
"Banks and credit unions know Health Savings Accounts present them with a significant business opportunity and additional way to better serve their customers," said Dave Roy, vice president and general manager for banking at WKFS, in a news release.
"But it's also evident that this market is still relatively untapped," Roy noted, "and the greatest potential lies ahead, especially as health care costs continue to climb and consumers look for more effective ways to save and finance those costs."
Need for Consumer Awareness
But Health Savings Accounts have not yet established themselves as a permanent fixture in the health payment realm, D'Angelo said.
"While Health Savings Accounts are growing in popularity with financial institutions, customers are still in the early stages of adoption," the WKFS news release noted, "which may explain why customer demand is cited as both the number one reason institutions began or have not yet begun offering Health Savings Accounts."
D'Angelo explained the novelty of Health Savings Accounts frightens some potential consumers away. Some people fear experimentation with new ways to pay for their health care, so they approach Health Savings Accounts with caution. Others haven't yet grown used to asking questions about how much health care costs.
The survey reported 69 percent of financial institutions have 100 or fewer HSA accounts. Only 84 responding institutions have more than 500.
Helping Drive Change
Health Savings Accounts may relieve part of the crunch of today's health care market, but they're not the ultimate solution, D'Angelo contends.
"Health Savings Accounts are a consumer-driven product, an important component for the consumer-driven system, but they are a product, not a model," D'Angelo said. "We need more of a fundamental transformation in the system."
Nevertheless, D'Angelo believes Health Savings Accounts might help drive that more fundamental change--which the WKFS survey suggests may be coming soon, as both customers and their financial institutions are beginning to warm up to Health Savings Accounts.
Posted by Wiley Long at May 24, 2008 09:38 AM