Banks and Health Care Debt Collectors Poised to Benefit from Rise in HSA Growth

The dramatic downturn in the U.S. economy is accelerating the growth of high deductible healthcare plans (HDHPs), presenting short term opportunities for retail bankers and medical debt collection agencies, says an expert on the matter.

“Growth (in HDHPs) is very strong because of the cost of health care,” said Red Gillen, senior analyst for Celent, a research and advisory firm that publishes reports identifying trends and best practices in financial services technology. He estimates that in 2010, 8.2 percent of all U.S. workers will be enrolled in HDHPs, a 33 percent increase over 2009.

The growth is largely due to more employers offering the plan to their employees, and workers enrolling in them to save money on premiums, or because they have little choice.

According to Mercer LLC, a global provider of consulting, outsourcing and investment services, 18 percent of the early respondents to its 2009 National Survey of Employer-Sponsored Health Plans said they are eliminating high-cost or more generous health plan options in 2010 as a way to move employees into lower-cost consumer directed health plans tied to health savings accounts or health reimbursement accounts.

With more than half of employers experiencing layoffs over the past 12 months and nearly one-third anticipating future layoffs, Mercer said the move is as much out of necessity as a desire to cut costs. Consumer directed health plans are significantly cheaper, averaging about 20 percent less in 2008 than traditional PPO and HMO plans, Mercer said.

“The economy clearly had an impact on rising health care costs…So employers have had to work harder than usual to keep the health benefit cost increase for 2010 down,” said Linda Havlin, worldwide partner at Mercer. “Those organizations hardest hit by the recession are making the biggest cuts.”

Although employees enrolled in HDHPs will benefit from lower annual premiums, Celent estimates that their out-of-pocket expenses will more than double, leaving health care providers to collect not just partial payment, but in many cases, full payment for the services they provide.

Some providers have prepared for shifting environment, Gillen said. But others have moved beyond collecting from a handful of insurers to an environment where they have to collect from hundreds, if not thousands, of patients in which they have no contractual relation, he said.  

“In the short term, health care providers will need to collect more and that will result in more billing agency business,” Gillen said.  But he cautioned that collection agencies’ business models will be threatened longer term by providers who use technology to better determine the portion of the bill that is the patient’s responsibility and collect it upfront.

Banks, meanwhile, will benefit from an estimated 8 million new HSA accounts established by 2012, Gillen said.

“For the next two to three years, there will be more HSA deposits for banks,” Gillen said. But he warned that the outcome of health care reform will determine what, if any, future HSAs have.

“Some members of Congress feel that HDHPs is not sufficient.  The question is minimal coverage and do HDHPs meet that definition. If they do meet that definition, there’s a rosy future for HSAs. If they do not meet the definition of minimal coverage, HSAs will slowly fade away.”