Blue Cross starting bank for health-related matters
By Sarah Skidmore
The San Diego Union-Tribune
December 6, 2005
The Blue Cross and Blue Shield Association announced yesterday that it will start its own bank (Blue Healthcare Bank) to provide members a place to handle their health-insurance related banking.
This is the second recent financial offering by the Blue Cross and Blue Shield Association. Last month, the association announced an agreement to work with Visa on a branded debit card to pay for health services.
The bank will provide financial services for members enrolled in plans that require dedicated accounts for their health care spending, such as health savings accounts, flexible spending plans or other health reimbursement arrangements.
Such plans are part of a small but growing trend in insurance toward “consumer-directed health plans,” which essentially put more of the decision-making and financial responsibility on the consumer.
Health plan members would use the bank to save and withdraw money for health expenses, even using check or debit cards to do so. The bank will offer some credit lines to members to pay for health care expenses and various investment opportunities.
“It’s a strategic investment for the blues,” said Maureen Sullivan, senior vice president of strategic services for the Chicago-based association. “For these (new health) services to succeed long term, we need to provide comprehensive services.”
http://www.signonsandiego.com/news/business/20051206-9999-1b6bank.html
BlueCross BlueShield Association
Press Releases
12/05/2005
Blue Cross And Blue Shield Companies To Develop Bank
11/21/2005
Blues And Visa Enter Into Co-Branded Debit Card Deal
http://onlinepressroom.net/bcbsa/
Comment: Supporters of health savings accounts (HSA) with high-deductible health plans (HDHP) tout the simplicity of paying cash for up-front medical expenses followed by 100% coverage after the HDHP deductible is met. They gloss over the fact that complex, detailed accounting is required to define when the deductible has been met. Factors to be considered include whether services and products qualify, whether they are provided in or out of network, and what amounts are disallowed because they exceeded the contracted rates. Additional accounting may be required to determine tax liability and potential penalties for disallowed distributions.
As the largest marketers of HDHPs, Blue Cross and Blue Shield insurers (BC/BS) faced the possibility of losing control of the administrative task of providing this complex accounting. The alternative would have been to require their beneficiaries to provide reams of documentation at the time that the deductible was believed, by the patient, to have been met. The receipts, cancelled checks, charge card records and whatever else would not have provided enough information for the insurers to qualify the expenses as meeting the deductible. In most instances, many charges would be disqualified and the deductible would not have been met, but the insurer would have expended considerable administrative effort with the end result that no HDHP benefits would be paid out.
In order to maintain control of the administration of the up-front expenses, BC/BS really didn’t have much choice other than to establish Blue Healthcare Bank to segregate the accounts, and the Blue-branded VISA debit card to document access to the accounts. An additional reason for the bank is that BC/BS had to enter the lending business in the form of credit lines attached to the debit cards. For the debit card to function smoothly at the time of service, credit lines have to be in place to cover expenses after the HSAs are depleted, but before the deductible is met. It is not clear whether they also intend to extend credit for the inevitable disallowed charges that occur after the “100% coverage” is in place.
HSAs do not provide administrative simplification. Not only do the HDHPs require the same administrative effort to account for HSA spending, they are now adding the administrative costs of banking and debit cards. It makes you wonder what the driving force is behind the passion of the HSA/HDHP advocates. It certainly isn’t logic.