Given the recent stock market contraction and the “state of emergency” in several financial services firms, one has to wonder what impact this might have on the adoption of HSA accounts. Let’s look at it from the stakeholders’ perspective:
Consumers
With tighter times it makes sense that “spenders” will increase and “savers” will decline and that elections will be reduced to pay for food and fuel at home. It is also likely that some consumers who have invested their HSA dollars in the stock market will lose enough to create the unplanned gap in coverage that many employers have feared in the past.
Employers
With budgets tight they will seek solutions like HSAs to reduce their overall healthcare costs and/or shift these costs to employees. On the other hand it is possible that employers and consumers may be concerned about putting these healthcare dollars at risk in the stock market or with the financial health of the banks that hold these assets.
Health Plans
If you believe like I do that even after the election there will be little change in the overall “format” for healthcare in the U.S., it is likely that costs will rise and covered lives will decline, making low-premium plans and thus HSAs a more sought-after offering.
Banks
There is a fairly consistent need for deposits, and HSAs are a natural way of boosting balance sheets. On the other hand, capital-strapped banks are in no position of pushing out new healthcare products.
To summarize, poor economic conditions and reduced confidence in our financial institutions will increase the number of HSA accounts but reduce contributions, balances, and the overall satisfaction of CDHPs.
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