First Quarter CDHC (HSAs/HRAs) Results Soaring, Will Reach 15.7 Million By The End Of The Year; Americans Still Have Bond With Traditional Plans

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As the first quarter winds down, the CDHC marketplace in general and HSAs in particular are showing remarkable growth in a transitional year.

As the first quarter winds down, the CDHC marketplace in general and HSAs in particular are showing remarkable growth in a transitional year.

Information Strategies, Inc. (ISI) has been closely following trends in HSAs for the past 27 months and sees some significant growth in the CDHC sector. It has also begun to track the impact of HRAs on the ways American companies and workers are evolving their healthcare coverage.

HSAs are a two part program whereby a high deductible insurance plan is paired with an individually owned custodial account.

HRAs are sponsored by employers and the unused funds rolled over into the next year but revert to the company should the employee leave.

ISI is predicting that HSA–insured Americans will approach the 4 million mark by the end of the quarter and reach more than 7.4 million by the end of 2006. Adding in the employees currently under an employer-sponsored HRA plan, the total CDHC market for these two offerings combined will be 13.7 million by the end of December. Account custodians for HSA accounts are expected to reach the 1.4 million level by the end of the quarter and 3.6 million by the end of the year.

More data is available at

Significant Upward Trend

“Our monitoring data clearly shows a significant upward trend in CDHC adoptions by employers, employees and individuals,” said JoAnn Laing, ISI’s President. “We expect that in the coming quarters, more of these applications will appear and speed the transition into the CDHC environment of millions of Americans.”

“Our polling to date shows that CDHC offerings appeal to individuals across age groups and income levels as well as amongst small, medium and even large employers,” said Laing. Laing also said, “polling of the company’s four million regular small-, medium size companies executives surfaced a significant number of firms planning to introduce HSAs into their healthcare schemes in January, 2007.”

“Because of competitive pressure and the need to alleviate employee concerns,” she said, “many firms (13%) who had not offered healthcare insurance in the past were actively looking at doing so in 2007.”

Association Bill Popular

Laing and others sited the possibility of Senate passage of a bill permitting smaller companies to join associations to obtain healthcare was having a positive effect on ISI’s executive readers. "We think this bill will be a powerful factor in driving HSA and HRA offerings in 2007 if it is passed as currently constituted,” she reported.

ISI is also conducting a nationwide survey involving CDHC insured, individuals covered by more traditional plans and uninsured Americans to gauge the impact of these evolving offerings.

“The results to date clearly point to the popularity of CDHC offerings but also of the strong bond many Americans have for more traditional plans,” Laing added. “What we are seeing is that the cost of healthcare is severely impacting respondents’ healthcare decisions and that they want changes,” she added.

CDHC Programs Multiplying

At the same time, as insurance providers, TPAs, account custodians and their supporting IT providers have implemented significant programs to help individuals and companies better utilize CDHC offerings.

“Altogether,” said Laing, “We are beginning to see the impact of IT applications in the marketplace.”

Among the many offerings that make the transition to HSAs easier is AETNA’s integration with Quicken to permit individuals to better monitor their HSA accounts.

Account custodians are offering packages that include investment opportunities for clients while American Expresses new program tying a line-of-credit to the account integrated with Empire Blue Cross demonstrates the trends towards tomorrow’s HSA program. Amex is rapidly signing up new insurance partners and other credit programs such as United Healthcare’s Texas based pilot are also appearing. These offerings, like others to come, will allay the fear many individuals indicated in surveys that they do not have enough funds in their accounts to pay for charges associated with a major illness.

Several integrated packages, tying the individual’s account to their insurance provider to help monitor expenditures and ease their fear of not-paying the healthcare provider the most economical fees are coming into the market.

For individuals to get their insurance/account program considered, go to and complete the survey.


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Donald Mazzella
Information Strategies, Inc.
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