The Sentinel of No Man's Land

Kaye Dunagan


HSAs came into being when President Bush signed the Medicare Prescription Drug Act, and it is a good guess that they are going to be presented as a boon to health care in the State of the Union Address. Hopefully they won't be as confusing as the prescription act is being, but it is a pretty safe bet that the persons who will benefit are the young, healthy, affluent members of our society - especially the wealthy. It is a 401k for health purposes.

Banks and others are drawn by the promise of lucrative fees they can generate by offering consumers mutual funds and other investments as their account balances grow. Most also charge $50 to $75 to set up a health savings account, and they collect perhaps $40 or more each year in maintenance charges and service fees. Also anyone who has been watching the stock market recently knows that it has been going up and down like a yo-yo and there has not been much gain.

These supercharged checking accounts, which must be linked to a high-deductible health insurance plan, allow consumers to invest their own money for current and future medical expenses and have it grow tax-free. Not since the creation of the individual retirement account in the mid-1970's has such a potentially huge mountain of money landed in the lap of the financial services industry.

Banking lobbyists have met with White House officials at least three times over the last year to discuss the rules governing health savings vehicles. But until recently, most have been shy about their interest in such plans. Now, they have established a lobbying group, the H.S.A. Council, and are spending millions of dollars to roll the plans out.

“Billions of dollars that used to be written in the form of checks with insurance companies' names on them would instead go to credit unions, banks, and long-term investment houses,” said Dan Perrin, the publisher of H.S.A. Insider and executive director of the H.S.A. Coalition, a lobbying group backed by 70 small-business and medical industry groups as well as the American Bankers Association. “You know America : you see a financial opportunity and it sets off a gold rush.”

Even though the health plan and savings account are separate products, big banks and insurance companies pitch them together as an “integrated solution” and split the fees. Health insurers keep the premiums; banks retain the investment management fees and the debit card transaction fees. The two split the money earned for opening and maintaining the accounts.

Even without the lucrative investment management fees, bank executives like Daniel Kelly, manager of H.S.A. services at U.S. Bancorp, say health savings accounts are attractive. Banks make money each time a customer swipes his debit card at a doctor's office. Payment processing alone could generate some $2.3 billion over the next five years, the DiamondCluster study estimates.

This looks like another welfare scheme for the wealthy people. So please check this out carefully, before you jump on the band wagon!


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