Blues association gets out of banking business
■ Analysts say the exit could develop into a trend for other small managers of health savings accounts.
By Emily Berry — Posted Sept. 8, 2009
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In 2007, BlueCross BlueShield Assn. chartered its bank, part of a wave of health plans setting up affiliated banks to hold members' health savings accounts.
Now it may be part of a new wave -- a surge in market consolidation -- as the plan goes up for sale.
Jeff Smokler, spokesman for the BlueCross BlueShield Assn., said it was simply "the right time" for the group to get out of operating its Blue Healthcare Bank, based in Sandy, Utah.
Carlton Doty, a health industry analyst and vice president and research director at Forrester Research in Cambridge, Mass., said the market for HSAs doesn't appear to be going anywhere, but Blue Healthcare Bank may not be big enough to survive in it.
Part of the problem, Doty said, was that BlueCross BlueShield-affiliated plans were not required to send member accounts to Blue Healthcare Bank. That limited the bank's growth.
Smokler said the bank manages 6,300 accounts, which Doty characterized as "not even a blip on the screen."
According to the most recent Federal Deposit Insurance Corp. data for Blue Healthcare Bank, dated March 31, the bank's deposits were worth about $28.7 million. By comparison, OptumHealth Bank, run by UnitedHealth Group, held deposits of $777 million.
HSA business is booming for other banks, customers report being happy with them, and there's been little mention of doing away with HSAs as part of health system reform, analysts said. But the market could look a lot different as it ages and bigger companies gobble up smaller competitors.
"I believe there will be some consolidation in the industry as competition gets more fierce," said Chad Wilkins, chief executive officer for UnitedHealth Group's OptumHealth Financial Services.