HSA Bank has run into a big obstacle in its push into the large-employer market for health savings accounts: health-care reform.
"We've moved forward with our insurance carrier partners, and they are enrolling large employer groups for us," said Kirk Hoewisch, the president of the Sheboygan, Wis., subsidiary of Webster Financial Corp. in Waterbury, Conn. "But … some employers are putting off their decisions until after things clarify."
As a result, though HSA Bank is gaining business, its ambitious goals are uncertain of achievement. In interviews in June 2008, the bank's executives said they expected to more than double its individual accounts, from 213,000 at that time to 500,000, within two years — and 2 million within seven years. Hoewisch said last week, however, that it will not be possible to say whether those targets are realistic until the debate over health-care reform is resolved.
HSA Bank has been growing nevertheless. Its individual accounts rose 22.1% in the past three months, to 260,000, and assets in the accounts rose 29.3%, to $653 million, during the past 15 months. "We're moving ahead as if HSAs will be a part of the future," Hoewisch said.
The large-market plan pivoted on developing close partnerships with insurance carriers to provide specific services that large employers demand. But with those employers wavering, HSA Bank is focusing for now on its partnerships with just two insurance carriers, Hoewisch said.
A third large carrier was nearing a partnership with the bank this spring but decided to wait as the health-care reform effort began to unfold, he added.
"They were looking to move to us, very positively, but now they are on the sidelines, waiting," he said.
Hoewisch said the speed and vigor with which President Obama addressed health-care reform surprised him. "When he was running for office, and even after he was elected, I had no idea he was going to make health care not only No. 1 [as a legislative priority] but basically almost personal," he said.
The uncertainty over HSAs' role in an overhauled health-care system appears to be affecting the industry as a whole. Kunal Pandya, a senior analyst for health-care insurance and payments at the Aite Group LLC research firm, said banks with established programs are reporting steady but somewhat diminished growth.
Aite projected that HSAs and other consumer-directed health-care accounts would total 52 million by 2012, up from 30 million last year. Pandya said he recently reduced that forecast by 5% to 10% to account for the effect of health-care reform.
HSA Bank's push into the large-employer market began two years ago with a multimillion-dollar project aimed at integrating its services with those of insurers. The bank plans to crank up the business it is getting through its two carrier partnerships — both with members of the Blue Cross/Blue Shield network — and then seek out more carriers to align with, said Hoewisch. "We are focusing more on making those flourish before we move aggressively to others," he said.
The Wisconsin bank started out catering to smaller employers, with insurance agents often acting as the conduits. Thanks to its big-employer drive, it has signed deals with about 30 employers that have at least 1,000 employees each; these companies have up to 50,000 workers, in all, eligible for HSAs, Hoewisch said. About 14% of these eligible workers have opened health savings accounts, so there is room for further penetration, he said.
"We're starting to get that traction in that large-market space," Hoewisch said.
Watching legislative efforts by various congressional committees unfold has been "a roller coaster," he said; HSAs seem to figure in plans at some points but fade into the background at other points.
Yet Hoewisch reiterated a theme that other HSA executives have struck, that there now are so many accounts that a place for the product must be maintained. If HSAs appear threatened when the legislation begins to solidify, the bank will urge its partners and account holders to make their views known to their elected representatives, he said.
"We don't want to cry 'wolf' too many times while the debate is going on," he said. "But if we see potential damage to HSAs, we'll say, 'call your congressman.' "