Consumer Power Report #137

Published July 25, 2008

The next in our series of Consumer Education Workshops will be held in Austin, Texas on October 17. We haven’t pinned down the location yet, but the agenda will go like this:

12:00 noon
Welcome and Introductions
Greg Scandlen, The Heartland Institute
Hagerstown, MD

12:10 p.m.
How to Buy Health Insurance
Sharon Alt
Alt Benefit Consultants
Fort Worth, TX

12:40 p.m.
How to Manage Your HSA, HRA Accounts
HSA Bank

1:00 p.m.
How to Shop for Medical Services
Donna Kinney
Texas Medical Association
Austin, TX

1:20 p.m.
The Legislative and Regulatory Environment
Devon Herrick
National Center for Policy Analysis
Dallas, TX

1:40 p.m.
Questions for the Panel

2:00 p.m.
Wrap-up and Send-off

More details and information on how to register will be released in the next few weeks.



HSA Bank

HSA Bank has released the results of a survey it conducted of 733 respondents drawn from its “employer relationships” and their employees, with and without HSA programs. The survey found that, “high deductible health plan respondents are more likely to be engaged consumers who ask about costs prior to making an appointment, seek information about generic prescription alternatives and select lower cost treatment alternatives,” according to a press release from the company.

It also found …


  • When rating their overall health, no statistically significant difference exists between the respondents with a high deductible health plan and those in a traditional health plan.



  • Respondents with a high deductible health plan were no more or less likely to decide against or delay treatment due to cost when a treatment was recommended in the past 12 months.



  • Nearly 73 percent of the respondents with a high deductible health plan chose that plan over a traditional health plan option.


Bank president Kirk Hoewisch is quoted as saying, “The data collected in the survey suggests that people in high deductible health plans seek healthcare at the same rate as those in traditional plans, but with the added benefit of making careful consumer choices.”

SOURCES: Market Watch Press Release; HSA Bank Survey

Finance and Commerce

An article by Mark Anderson in Finance and Commerce says banks are setting their sights on HSAs. It cites a 40-person CPA firm in Minnesota that converted to HSAs three years ago, and concludes, “Two and a half years into their experiment, the Knutson firm has pronounced its high-deductible plan as a success. More than 80 percent of employees are enrolled, and most are making significant contributions for both short and long-term medical needs — enhanced by a monthly contribution from their employer. And from the employer’s perspective, the adoption of the plan has restored stability and sustainability to health benefit costs. Premiums actually dropped or remained stable in two of the past three years, while traditional plans were continuing their near-double-digit climbs.”

These kinds of results are convincing banks of an enormous new opportunity to “pull money out of insurance premiums and into banks.” Well Fargo’s Jose Bequer says, “We think we’re hitting that point where growth will really take off. People are just beginning to understand the opportunities these give them to both save for the future and pay for their annual expenses, both with the value of tax benefits.”

SOURCE: Finance and Commerce

Bank Technology News

Bank Technology News included a cover story on the opportunities presented by consumer driven health care. The article by Michael Sisk notes that banks missed out on the growth of 401-Ks when they were introduced, figuring they would never catch on. As a result, “Fidelity is sitting on $1 trillion today, but bankers are smart enough not to sit this one out,” according to ConnectYourCare’s Allen Pease.

In describing the potential growth of HSAs the article says, “Congressional analysts predict more than 40 million (HSAs) will be established in the next 10 years, while Celent forecasts 40 to 50 percent growth from 2008 until 2012, from about three million HSAs to 12.5 million by 2012.” It goes on to quote Joe Ready, head of Wachovia Retirement Services, as saying, “This is a great opportunity, it’s an underserved market and we want in.” The article adds, “Unlike most new products that either cannibalize accounts from within, or seek to grab marketshare from competitors, HSA funds come from outside the industry, specifically from insurers, eliminating in-house conflicts and the tough work of peeling away a customer from another bank.”

The article goes on to caution that banks need to realize HSAs are a unique product that “can’t be just tacked on to an existing platform.” The article cites Mr. Ready of Wachovia as saying that “when the bank began its platform assessment the expectation was it could modify one of its existing platforms to accommodate HSAs; but the more they looked at it “the more it looked like we were trying to fit a square peg into a legacy platform. The big catch was marrying the bank’s competencies around asset management, card payments, distribution and FDIC insurance, with record keeping associated with HIPAA.”

SOURCE: American Banker

GOOD PRESS AROUND THE COUNTRY reported last month that HSA enrollment should double by January 1, 2009. It also found that average employer contributions to HSAs rose 17 percent in 2008, that one-third of HSA enrollees were previously uninsured, that the income differences between HSA holders and managed care enrollees are “imperceptible,” and that the states with the greatest HSA penetration are also battleground states in this year’s presidential election. A summary of the report is available at no charge for HSAFinder.


The South Baldwin (Alabama) Chamber of Commerce is working with Assurant and United Healthcare to offer its members “25 different health insurance plan options,” according to a recent article in The Mullet Wrapper. The article says, “The cornerstone of the Chamber Association/South Baldwin County health insurance offerings will be Consumer Driven Health Plans, which allow users to pay for routine medical expenses through Health Savings Accounts or Health Reimbursement Arrangements.”

SOURCE: Mullet Wrapper (go to the June 18, 2008 edition, page 22)

In the El Paso Times, Carolyn Mora, a CPA, writes that many of her clients are struggling with health care costs and she encourages them to look at HSAs. She mentions some of the benefits of having an HSA, especially the tax benefits, and walks through the basic rules of how they work. More CPAs should be giving this kind of advice.

SOURCE: El Paso Times (article has been archived)

Wily Long of HSA for America, also has an advice column that encourage readers to save money by choosing an HSA. He raises four key issues:


  • HSA annual premium increases are about one-third of other plans.



  • You can save more by raising your deductible as your account grows.



  • Save even more by maintaining a healthy lifestyle, and that will make it easier to switch carriers if you need to.



  • Shop around for alternative carriers if your premiums go up by too much (the HSA itself is fully portable as you change insurers).


HSA for America also has a nifty video available on its web site that is fairly generic — that is, it is not just selling the company product but explains the whole idea in general terms. This kind of grass roots education is well overdue, so it is good to see it generally available.

SOURCE: Mr. Long’s article in Best Syndication; HSA for America web site with video link

In the Wall Street Journal’s “Your Money Matters” column, Jane Zhang describes how consumers can get the most value out of their HSA programs. She notes that some 40 percent of those with qualifying insurance have yet to open the account itself, and provides six tips she has culled from financial advisers and other experts on “how to manage an HSA to your best advantage.”


  • If you’re eligible, open an account.



  • Shop around and compare fees.



  • Be mindful of contribution limits and account balances.



  • Be a smart shopper for care providers.



  • Avoid tax pitfalls.



  • Grow your money.


SOURCE: Wall Street Journal


We haven’t paid enough attention to Georgia’s new health reform law. Ron Bachman has been working hard to get this done and he deserves a lot of credit for his persistence, starting several years ago when the Center for Health Transformation published his, “HSA State” paper. Mr. Bachman used to be a consulting actuary and he brought his training to bear on the Georgia reforms — methodical, analytical, and patient.

He began by assembling a “Georgia Uninsured Working Group” that included hospitals, physicians, insurers, and brokers in late 2007. They were able to agree on this limited, but radically different approach to health reform. They first analyzed who the uninsured were in Georgia and found four categories: Those not needing financial assistance (30 percent of all the uninsured); those needing some financial assistance (35 percent); those already eligible for government programs (20 percent); and the uninsurable (15 percent). They decided to focus on the first two groups, and found that many of them simply don’t find available products very attractive. The final law provides some minor subsidies — it waives the premium tax, provides small employers with a $250 per-worker tax credit, and allows a state tax deduction for individuals who buy HSA-eligible insurance. More importantly, it encourages innovative plan design so insurers can come up with programs that people will want to buy.

The new law also makes it possible for employers to set up HRA accounts, and for workers to purchase coverage on a tax-favored basis with those funds. This could be a boon to small business owners who cannot afford a full-blown benefits program, but would like to contribute to their employee’s health care needs.

In a follow-up analysis, Mr. Bachman looks at the economic impact of the new law and concludes that these modest measures could remove 500,000 Georgians from the ranks of the uninsured, resulting in an economic gain to Georgia of $3.5 billion over five years.

SOURCE: Bachman’s description of the new laws; Bachman’s analysis of the economic impact


Greg D’Angelo of the Heritage Foundation has a nice piece called “Stop Attacking HSAs” in the Pittsburgh Tribune-Review. He says, “Of course, no serious health policy analyst believes HSAs are a panacea for all that ails America’s health-care system. But the accounts were a welcome step in the direction of patient-centered health reform.”

He raises the inconsistencies of the Congressional critics, some of whom say HSA account balances are too low to “protect” consumers from health care expenses, with others saying HSA account balances are too high, indicating that people are neglecting needed health care. Whichever it is, people are getting it wrong, according to some. “This reasoning reflects an underlying assumption that patients can’t be trusted to effectively control their own health-care decisions.”

But the real reason for the attacks, says Mr. D’Angelo, is that, “Some in Congress are at ideological odds with patient-centered health care. The dispute shows, yet again, they want to preserve and protect the worst features of the status quo.”

SOURCE: Pittsburgh Tribune-Review

Here’s an example of what Mr. D’Angelo has in mind. Speaking at a forum in Nashville, the new Editor-in-Chief of Health Affairs, Susan Dentzer, “said there are predictions that the HSA phenomenon will likely be “the next sub-prime mortgage crisis,” with people walking away from large medical bills they cannot afford to pay,” according to an article in the Triangle Business Journal.

Huh? “There are predictions,” by whom? Some carnival fortune-teller? In fact, HSAs strictly LIMIT the amount of out-of-pocket exposure of a consumer — unlike, say, Medicare, where there is absolutely no limit on the amount of expenses the consumer is expected to pay every year.

The silly season has arrived.

SOURCE: Triangle Business Journal