Interview: HSA Expert Roy Ramthun Part 2 of 2

Last month leading Health Savings Account (HSA) expert Roy Ramthun and www.HSAed.com senior vice president shared some of the unique insights he gained while implementing these products nationwide as health care advisor to President Bush and Senior Advisor to the Secretary of the U.S. Treasury for health initiatives.

Roy continues to share his advice for agents interested in marketing HSAs and forecasts future developments in this growing market.

Norvax: Let’s switch gears and talk about how agents and brokers are affected by HSAs. What are the biggest challenges insurance agents have when marketing HSAs?

RR: I think the biggest challenges that they have are that these are new products, still relatively new, and there are still many people who have never heard of an HSA. So you have to spend extra time explaining to people not only the insurance but also the account and how those two work together. Some agents are paid on percent of premium for their commission, and when the premium is lower because the deductible is higher that means sometimes their commission is not as high as it would be under a traditional policy.

So I think you’ve got agents out there who are challenged by the financial incentives to sell these policies in and of themselves. Anything that is a change from people’s current situation is something that takes a little bit of extra time for most people. But I think if they’re willing to do that they’re going to find out they could be much better off. And again, the HSA Ed site is a place they can send people to help them understand these concepts over and above what the agent would normally describe on their own in their time with somebody.

Norvax: Do you sense any misconceptions or hesitation in the agent community about this new product?

RR: In the agent/broker community I think most of them have generally embraced HSAs. It takes a little bit of extra time for them to understand all of the features and be comfortable talking about the various situations and questions that their customers might raise. Some people might not be willing to spend that extra time. For those that are, we want to be able to send them business and one of the things we hope to do with the HSA Ed site is help consumers who are looking for an HSA plan find a qualified agent that they can talk to that will meet their needs.

Norvax: What advice do you have for agents who are not marketing HSAs right now, but want to?

RR: My advice to them is spend some time learning about HSAs. I think if they spend some time on HSA Ed they will understand some of the issues and concerns consumers have raised, because most of the information that is on that site is in direct response to questions that have come in from consumers. So they would get a better understanding from their perspective what they would want to know about these policies. Then they should make sure that they understand how they work.

Norvax: How are insurance carriers adapting to HSAs? What types of product innovations have you seen carriers making with HDHPs?

RR: Carriers have adapted very quickly. Within the first year more than 80% of insurance companies offering healthcare policies were offering an HSA-qualified policy. And now I think it’s virtually 100% of them. Everybody I’ve talked to continues to believe this is going to be the growth area of the future. Every time we see studies come out from some of the insurance companies — Blue Cross Blue Shield, Cigna just came out with an updated study yesterday, Aetna, United Healthcare — all of them suggest that this is a way for people to lower healthcare costs in the future. And in some cases these are lowering costs for the first time, that’s completely unheard of in healthcare. This is going to be the dominant trend.

To be honest I have not heard of too many completely innovative ideas out there in these policy designs. Some are trying to market the coordination of the health insurance and the savings account through partnership arrangements they have with banks. I think it remains to be seen if that’s what consumers want or if they really want to put their money in a local institution they can reach out and touch. I know some companies have thought that it’s important to try to sell some of the other permitted coverage types of insurance policies, things that don’t conflict with your eligibility for an HSA, such as a hospital indemnity policy or a disease-specific policy. I have my own views on whether people need those types of policies but there are those that think that it’s important to offer consumers those types of options when they sell them.

We’ve had some companies try to be really creative in the area of prescription drugs that may be considered preventive care. And while I think some of them have gone further then what may be what the federal government is comfortable with, I think it’s important that we have those discussions about what might be considered preventive care because medicine is going to continue to evolve and we need to make sure these policies are flexible enough to accommodate these changes in medicine over time.

Norvax: What are the future trends in the consumer directed health care market? What should agents be on the lookout for?

RR: I expect HSAs and frankly the sister program HRAs to continue to grow. I think it’s going to be the dominant form of insurance offered not only by employers but available in the private market. This is a trend that’s here to stay even in light of the recent elections. It’s something that employers and consumers are responding positively to in the marketplace and there’s nothing but growth opportunities. The more money that people see is leftover in their accounts at the end of the year the more they’re going to want to maximize those opportunities.