The bill to overhaul the nation’s health care system the House of Representatives approved on March 21 is unlikely to derail growth of tax-deferred health savings accounts and associated debit cards, at least not immediately, experts say.

“The wording in the health care legislation the House passed is favorable for the high-deductible health-insurance plans that are required for HSAs,” Red Gillen, a senior analyst with Celent, tells PaymentsSource. “We will continue to see strong growth in high-deductible health insurance plans, which cascades to more growth for HSAs and debit cards.”

That is good news for banks offering HSAs, including JPMorgan Chase & Co., Wells Fargo & Co. and U.S. Bancorp. Celent estimates that HSAs overall grew 45% between January 2009 and January 2010.

“That kind of growth is the envy of any bank offering a product,” Gillen says.

Most HSAs have an associated MasterCard- or Visa-branded debit card enabling users to make payments to health care providers and retailers for services, drugs and medical supplies.

Some 13 million Americans have HSAs, with the heaviest concentration in Ohio, Florida, Illinois, Texas and California, says Donald Mazzella chief operating officer and editor at Ridgefield, N.J.-based Information Strategies Inc., publisher of, a consumer Web site providing broad HSA information.

It was unclear until the final hours of health care reform debate whether high-deductible insurance policies would be allowed under the new legislation, Mazzella says. “As far as we can determine, the way the House and Senate bills are written now it looks as if high-deductible insurance policies satisfy the criteria” to remain viable amidst new health-insurance plans the government will mandate all consumers acquire by 2014.

But the bill introduces some wrinkles that potentially could jeopardize the long-term profitability of HSAs to banks, observers say.

Beginning in January 2011, the penalties for use of HSA funds for nonqualified expenses will rise to 20% from 10%. Moreover, beginning next year consumers no longer may use HSA accounts to pay for over-the-counter drugs and medical supplies without a doctor’s specific recommendation.

These new provisions could lay the groundwork for requiring further substantiation of HSA expenditures, Gillen says. “With increased penalties and more-complex rules surrounding qualified medical expenses, it may open the door in the future to more enhanced substantiation of expenses, which would add costs to banks offering HSAs.”

Though debit cards associated with HSAs continue to grow, there is still a large gap in the information available about how much a patient owes when leaving a doctor’s office, Gillen says. “Usage of health account debit cards would really jump if hospitals’ and doctors’ front-office systems could tell people on the spot how much they owed for services. Those systems to not exist generally,” Gillen says.

Instead, providers bill patients later for services, which consumers pay through a variety of channels.

The Senate next must vote to pass the legislation the House approved. President Obama is expected to sign the legislation as early as Tuesday.

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