The Blue Cross and Blue Shield Association wants to launch a bank that will administer its consumer-directed health plans, a responsibility currently shared by third-party financial institutions.
The association announced that its board of directors has approved development of the Blue Healthcare Bank, which would simplify the administration of health savings accounts and other similar plans offered by Blue Cross insurers throughout the U.S., said Scott Serota, president and CEO of the BCBA.
The bank, which would be an independent entity based in Salt Lake City, would give those enrolled in Blue Cross plans a familiar, centralized financial institution to monitor and access their accounts, Serota said.
“By being closely aligned and integrated with your benefits, we will be able to ensure that your account is paid properly and that your deductible will be applied correctly,” he added.
Health savings accounts (HSAs) are high-deductible insurance plans. Employees deposit money into a tax-free savings accounts that can be used for medical expenses and rolled over like 401K retirement plans. Unspent money in the account accumulates and can be invested through the HSAs administrator.
Currently, the HSAs offered by Blue Cross insurers are administered by third-party banks.
Serota said the banking industry should not be concerned about encroachment because the Blue Healthcare Bank, which is subject to regulatory approval, would only offer financial services related to the management of the health plans.
“You’re not going to be able to have checking accounts,” he said. “There is plenty of room for us to work in concert, instead of in competition, with those banks.”
The move into the financial services arena could prove to be a lucrative one for Blue Cross.
By 2010, HSA accounts could be holding as much as $75 billion in assets, according to a report by DiamondCluster International Inc., a management consulting firm. As a result, financial institutions could stand to collect up to $3.5 billion from asset management and account fees, according to the report.
UnitedHealth Group Inc. has already launched its own financial institution for the management of consumer directed health plans, the Salt Lake City-based Exante Bank.
“For those of us in health policy circles, that was viewed as a savvy, way ahead of the curve move,” said Alwyn Cassil, a spokeswoman for the Washington-based Center for Studying Health System Change.
Cassil said consumers have been slow to embrace HSAs, but that is expected to change as more companies look for alternatives to rising health care costs.
About one million people have enrolled in HSAs and other similar plans since 2003, and roughly 40 percent of them are with Blue Cross insurers, said association spokesman Chris Hamrick. Blue Cross hopes to have the bank up and running by the summer of 2006, he added.
“There is money to be made in the administration of these accounts,” Cassil said. ‘”And if you want to create a bank, that tells me you want to make the money yourself rather than handing it off to someone else.”