LaSalle Bank recently joined a growing list of banks and credit unions delving into the consumer-directed health care market. LaSalle has teamed with ConnectYourCare to offer a bundled service that assists employers and employees in creating and managing consumer-driven benefits such as health savings accounts, flexible spending accounts and other health reimbursement arrangements.
The LaSalle CDH Solution offered through subsidiary LaSalle Healthcare Administrative Services LLC is a full-service, customizable account administration platform for employers, health plan and third-party administrators that incorporates ConnectYourCare’s suite of online administrative tools. It’s designed for businesses both large and small, said Nav Ranajee, vice president of the Health Care Product group at LaSalle.
There’s an enormous opportunity for banks in health savings accounts, which were authorized in late 2003 under the Medicare Prescription Drug Improvement and Modernization Act. Some financial institutions began offering HSAs in 2004.
Steve Davis, managing editor of Inside Consumer-Directed Care, predicts that over the next couple of years, every major financial institution will add health savings accounts to their product portfolio to capitalize on the revenue and account potential posed by consumer-driven health care. Hundreds of banks and credit unions offer HSAs, and even a few of the mid-sized and smaller banks are starting to get in on the action. Goldman Sachs estimates that the number of people covered under consumer-directed health plans will grow from under $4 million in 2005 to $49 million by 2010.
The introduction of LaSalle CDH Solution Dec. 1 has generated a lot of interest, Ranajee said. Prior to the launch, LaSalle sent out press releases and held a Webinar for all of its 10,000 clients in the Michigan and Illinois area just to get the word out. Two employers and two third-party administrators came on board with LaSalle CDH Solution in December.
“We’re getting a lot of inquiries coming in from employers who just want information on it,” Ranajee said. “I think the majority of employers out there today at this moment are just in an exploratory phase. For the most part, they were not ready to move towards these plans in 2006, but they’re all looking into it for this year.”
The platform has online enrollment and online educational tools, such as cost calculators, as well as online health care information tools, such as provider comparisons, drug cost comparisons and health risk assessments. Members also can research an illness or disease online and learn about treatment options. Ranajee said more and more employers are looking to implement wellness and preventive care initiatives within their companies because they realize those kinds of initiatives will help them save on health care costs.
“Our platform is a flexible platform that can be integrated with any high deductible health plan, so it doesn’t matter what high deductible health plan or what payer the employer is with,” Ranajee explained. “We can market our product and implement it without any type of health plan relationship. We are seeking health plan relationships as a secondary market, but feel that the health plan relationships will be a longer sale cycle because many of the health plans are already using the major banks that first got into this game.”
LaSalle is “hearing buzz out there” and is receiving requests for proposals from health plan administrators who are not happy with their first banking relationship or are looking for multiple banking relationships because they realize that brand recognition goes a long way with their members, he said.
LaSalle charges employers a per-member-per-month fee for use of the platform, and there’s a one-time set up fee, as well. The cost varies depending on the size of the company and the service volume.
“The per-member-per-month fee is built in and includes all of our services,” Ranajee noted. “I believe there are other banks out there that may have line-item pricing for different parts of the service, but we built it all in because we felt it was an advantage.”
One of the primary benefits for employers using the platform is cost savings, he said. Employers are faced with rising premiums year after year, and a lot of the smaller employers don’t offer any form of health insurance simply because they can’t afford it. As Ranajee sees it, HSAs and HRAs present opportunities for small employers without insurance because they have lower premiums and lower FICA taxes.
“You have to have a significant portion of your employee population sign up for HSAs and HRAs to really realize significant savings,” he acknowledged. “I see a big boom happening towards the end of 2007. 2008 will probably be a big year for this market place, which is what a lot of the leading companies out there are banking on.”
In its 2006 annual survey of employer health benefits, the Kaiser Family Foundation and Health Research and Educational Trust noted that since 2000, health insurance premiums have grown by 87 percent. During the six-year period, the percentage of employers offering health benefits fell from 69 percent to 61 percent.
There are some 2 million holders of health savings accounts in the country presently, and Aite Group consulting firm predicts the number will increase 489 percent to 11.2 million by 2010.
Ranajee said a consumer-driven health plan is especially advantageous to younger, healthy employees who don’t require frequent doctor visits, because with a high deductible health plan they pay lower premiums every month.
“We’re also seeing wealthy people over 40 who are investing in these plans as an investment vehicle, as a medical IRA for when they retire, because people fear Medicare is going to be reduced when they get older and there won’t be enough health care benefits,” Ranajee pointed out. “This is a great savings vehicle that you can put in a mutual fund and grow over time, and then when you pull it out it’s tax free for medical services. Data out there shows an equal number of savers are buying into these plans.”
There are proponents and opponents of HSAs. Opponents don’t believe high deductible health plans are ideal for the chronically ill.
Ranajee said it’s really too early to determine the satisfaction level of employees who use high deductible plans, but he said initial data shows there is a segment of the population that will find the plans advantageous. HQX