Not surprisingly, a number of credit card issuers have jumped into the HSA arena. So, too, have scores of financial services firms, eager to administer accounts and provide investment services. Wells Fargo & Co. offers six mutual funds as vehicles to invest HSA funds. UnitedHealth Group launched its own bank, Exante Financial Services, to also offer investment options.
Large mutual fund managers, including Fidelity and Vanguard, would make a logical fit for the HSA business. But so far, they have stayed on the sidelines. That could be because HSAs generally have low values and a high number of transactions. “As those accounts grow in value,” predicts Domaszewicz, “you will see more financial services companies getting into the health-care game.” The number of accounts could also grow given their early success: the Mercer study found that CDHPs cost employers 17 percent less than other plans.
At Hannaford Brothers Co., all 10,000 benefits-eligible employees will soon have only one option for health-care coverage: a high-deductible plan tied to an HRA. Hannaford, which runs 140 supermarkets in the Northeast, began offering a CDHP in 2002 as one of three health-plan options. But management decided to make a CDHP the only choice because of its success, says Peter Hayes, Hannaford’s director of health-care strategy. Hayes estimates that the company is saving from 5 to 7 percent using the CDHP. More important, he says, workers are more satisfied with the HRA than with other plans.
The Risk Pool
Critics of CDHPs say the plans attract the healthiest population of the workforce. Since constant users of medical services will fear spending more of their own money, the argument goes, they’ll likely stick with more-traditional plans. That, in turn, will leave those plans with a high concentration of expensive members, thus inflating the cost of the plans—a concept known as adverse selection.
“It’s a little troubling if you are segmenting the risk pool,” says Karen Davis, president of the Commonwealth Fund, an independent health-research firm. “It’s hard to figure out how you are going to save when you are spending more money on healthy people you didn’t have to spend much on before.”
That hasn’t been the experience of Hannaford, says Hayes. Even before the company began offering a CDHP as the only option, it didn’t segment the population. In fact, a number of employees with chronic conditions opted for the CDHP over other options. Hayes attributes this to the plan’s features, including tools like nurse help lines and a comprehensive Website with information on providers. Further, employees rarely have to deal with the dreaded gatekeepers that sit atop managed care systems.
In fact, Hayes says it’s the access to information, not the cost-controlling mechanism, that will have the real effect on the health system. “The Internet will revolutionize the way health care is delivered in this country,” he predicts.
Maybe. It remains to be seen whether consumer-driven plans will truly catch on with employers and employees. Certainly, the approach has its limitations. “If you are looking at this as the answer to all the health-care problems, it’s not,” says Hayes. “But it’s a good first step.” Getting employees engaged in the purchase of their health care, he says, is a powerful idea. “Giving them the tools to do that is the key to making it work.”