Given a disappointing early showing, the HSA
market is ripe for a remodel--one that will spur growth, customer churn,
and market concentration. Over the next five years, HSA growth will hover
between 40% and 50%, resulting in 12.5 million accounts by 2012.
Banks, insurance companies, and third parties have
built the health savings account (HSA). In fact, hundreds of companies are
involved in some aspect of enabling consumers to open and use HSAs. Celent
estimates that there were 1.9 million HSAs in 2007, but this number will
jump to 3 million in 2008, resulting in a boost in the growth rate from
36% (in 2006-2007) to 60%. Yet growth and revenues have been disappointing
for most, reflecting a classic example of shortcomings on both sides of
the economic equation for supply and demand.
In a new report, HSAs: Moving Beyond the Growing
Pains, Celent examines the impediments to growth in both
high-deductible health plans and health savings accounts. Growth has been
impeded by the fact that all providers involved, including employers, have
underestimated what a monumental transition the HDHP-HSA represents. They
wrongly assumed that, because employees weathered the transition from
defined benefit to defined contribution plans so well, they would
naturally embrace self-direction in healthcare. As result, there has been
inadequate pre- and post-sale education, insufficient decision-making
tools, and limited employer funding of accounts. Consumers are overwhelmed
by the choices and are unable to conduct an adequate cost/benefit
analysis.
“The next two years will mark a period of tearing
down and rebuilding at select providers and stagnancy and exiting at
others. The remodelers will gain market share during the expected strong
growth years of 2008 and 2009. The market will bifurcate into
manufacturers and distributors,” says Alenka
Grealish, author of the report and Managing Director of Celent’s
banking group. “Because manufacturing has a relatively high fixed cost
component, it will be concentrated in the hands of around 20 providers,
including HSA banks and HPAs,” she adds.
Despite the flat growth curve, Celent expects the
market to experience growth based on 2008 enrollment and remodeling
efforts. During the growth spurt, the HSA market will be up for grabs.
Celent believes that over the next 24 months, the market will experience
churn as consumers shop for a better offer--one not necessarily based
solely on price but also on customer service and other services (e.g.,
expense management tools). Paramount to a successful remodel is pleasing
the consumer and generating positive word of mouth. During this period,
banks, which add value, will have a chance to gain higher ground.
This 38-page report contains 18 figures and five
tables. It profiles the business models of the top 15 HSA providers as
well as up-and-coming innovative players. A table
of contents is available online.
