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Armchair Finance

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A New Ally for Patients and Providers?

The third-party payor system is hemorrhaging, and financial institutions smell blood in the water. As consumer-directed care picks up steam and financial institutions jostle for their share of the cash employers once lackadaisically dumped into health insurance premiums, insurers are frantically scrambling to maintain control over the money now bound for health savings accounts.

Predictions show that by 2010, deposits and assets in HSAs will total more than $75 billion (see cover story, page 20). By any standard, the shift will be transformative—probably in ways that still aren’t quite clear.

Hospitals, physician practices and other providers worry about collections headaches as they try to track down payments from hundreds or even thousands of individuals responsible for the first couple thousand dollars of their care each year. Patients worry they’ll have to spend hours analyzing poorly organized cost and quality data to find the right doc at the right price for the procedure that will make them well.

But even as they cannibalize their own business by offering consumer-directed plans, it’s health insurers that should be running scared. And unless they’ve created their own bank, like United Healthcare, insurers are slowly going to lose control of much of the billions spent annually on healthcare. For them, that’s potentially a very bad thing.

Benefitfocus, a company that spent its formative years smoothing the enrollment process for employee retirement plans, now designs online tools that help employees decipher the multitude of options for storing health and retirement savings. Benefitfocus Chief Executive Officer Shawn Jenkins offers an analogy that payors ought to heed. “Old-time pension plans, they’re like dinosaurs,” he says. “The same thing is happening with healthcare insurance.” Perhaps 10 percent of the “insured” market will select consumer-directed accounts this year. But that number’s almost guaranteed to grow, as employers are fed up with double-digit annual increases in healthcare costs. The consumer-directed care experiment may be their last, best hope.

Meanwhile, the opportunity is too great for financial institutions to let the experiment fail. Something they’ve already mastered—lightning-quick financial transactions—has to make the jump to healthcare. Making healthcare eligibility determinations and totaling progress toward high deductibles is an order of magnitude more complicated than making sure Mabel is able to change her 401(k) investment allocation or that Johnny can hit the ATM for some beer money, but “the amazing thing is it’s so much bigger potentially than retirement,” says Jenkins. “The retirement system is about one-tenth the size of annual healthcare spending.”

Blood in the water, indeed.

—Philip Betbeze