This Editor's Letter appears in the October 2009 issue of Cards&Payments.
The hot topic in Congress right now is health care reform, and for the payments industry among the main questions is whether health savings accounts will survive the debate. Thus far the HSA market is maintaining a healthy pulse, but any move to nationalize health care could flat-line the self-administered health-insurance plans, some observers believe.
HSAs are tax-deferred accounts available to consumers enrolled in high-deductible health-insurance plans, either as individuals or as employees. The debit card market has been one of the benefactors of HSAs, which began six years ago through the Medicare Modernization Act of 2003. As consumers use their HSA funds to pay down their deductibles, many are using debit cards to initiate the payments.
As this month's cover story by Cards&Payments Associate Editor Kate Fitzgerald points out, financial firms held close to $4.2 billion in HSA assets at the beginning of this year, up 32% from $3.2 billion a year earlier, according to the results of an annual survey Washington, D.C.-based Atlantic Information Services Inc.'s monthly newsletter Inside Consumer-Directed Care released last March. Some 8 million lives are covered by HSAs.
Banks thus far report no slowdown in account growth or in the use of debit cards to access accounts. Most of the cause for the relative slow growth in the HSA market might be tied to convincing employers to offer HSAs as an employee-benefit option and getting consumers to embrace them. But as proponents continue to spread word of the advantages HSAs offer, the momentum should grow.
But that will depend on whether HSAs remain an attractive option for consumers if Congress reshapes the health care marketplace. Among the proposals in President Obama's health care reforms is a requirement for small businesses and large corporations that employee mostly low-wage workers to provide health-insurance coverage. HSAs could be a relative low-cost option in that such companies could contribute toward workers' HSAs by helping pay the premiums at a cost lower than providing full coverage on their own.
Though it is to early to say whether HSAs have a long-term life expectancy, we believe Congress should include HSAs in its reforms and actually support that market. Besides providing consumers with the ability to choose where to receive care and with leverage to negotiate rates with physicians, funds that go unused during any given year can roll over to the next year and be placed into supplemental investment accounts for retirement.
And with deficits escalating and the possibility that Social Security benefits could run out in the not-so-distant future, any means to secure supplemental income would be a welcome benefit.