Abstract
NEW RESEARCH REPORT BY MERCATOR ADVISORY GROUP
Significant investments are being made today to implement Prepaid HSA cards
that will provide significant benefits to cardholders and Third Party
Administrators (TPAs). The most important of these is the inventory
information approval system (IIAS) that will deliver auto-adjudication,
significantly reducing administration costs for TPAs while eliminating the
need to submit and file records by the cardholder.
This report evaluates the size of the HSA market today and forecasts growth
through 2011. It also offers a forecast of the number of HSAs that will
likely be candidates for HSA Prepaid cards. Not all Health Spending Accounts
will be candidates for a Prepaid HSA card. For instance, many HSAs are under
funded. Many have very low transaction rates because the owner perceives the
HSA more as an investment account than for health spending. Both of these
consumer behaviors will reduce deployment of Prepaid HSA cards.
"It is not just account holder behavior that will delay adoption of Prepaid
HSA cards", states Tim Sloane, Director of the Debit Service at Mercator
Advisory Group. "The broad acceptance of the inventory information approval
system is also critical to the value proposition these cards deliver to TPAs.
Every time a transaction is not adjudicated it reduces the cost savings the
HSA depends on and frustrates the cardholder. It will be years before IIAS
works for services rendered at hospitals or doctor' s offices - and these
account for 51.7% of all healthcare related expenditures according to the
AMA."
Highlights of the report include:
- It is very likely that financial asset management firms will spend heavily
to advertise the benefits of the HSA as an investment instrument, directly
competing with banks for these account dollars.
- It is possible that the next presidential campaign will again focus on
healthcare and that a new administration will legislate an entirely new
environment - making all existing forecasts obsolete.
- While there are just over 1 million HSA accounts associated with a Prepaid
HSA card today, this will increase to 6.5 million accounts in 2011 - a
compound annual growth rate of just under 60 percent.
- Broad deployment of IIAS is an important assumption that is built into
this forecast. Any additional delays or balkanization of the market into
competing systems would significantly lower the forecast.
This report is 35 pages long and contains 13 exhibits, and tables.
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