HSA providers stand to benefit under Republican-led healthcare reform

Dive Brief:

  • Companies with a stake in the health saving account (HSA) business will likely see an influx of customers and cash if Republican-led healthcare reform efforts are successful, Kaiser Health News reported.
  • Shares for HSA provider HealthEquity have increased by more than a third since and it has been one of the best-performing stocks since the November election, which indicates investors are betting on expansion in the HSA business.
  • There will be more than 27 million active HSAs with more than $53 billion in total assets by the end of 2018, up from about 20 million HSAs with $37 billion in assets at the end of 2016, according to estimates from Devinir Research.

Dive Insight:

HSAs were established by legislation passed in 2003 and have become an increasingly prominent feature of the healthcare system since. Growth in HSAs was expected even if the Affordable Care Act (ACA) had not faced the threat of repeal, but its demise could prompt an even greater spike in their use.

Contributions to HSAs are currently capped at $3,400 annually for individuals and at $6,750 for families. These caps would increase to $6,550 and $13,100 respectively under healthcare reform legislation currently under consideration in the House of Representatives. The legislation would also reduce ACA restrictions on HSA spending.

“Loosening of contribution limits and redirection of ACA subsidies into individual HSAs will drive increased contribution rates,” Bill Limburg, a senior associate with Patapia & Associates, wrote in a recent report. “The channeling of younger, healthier consumers into HSAs will also result in greater carry-over balances from year-to-year, allowing HSAs to become true accumulation vehicles, rather than largely transactional accounts.”

Assets held in HSAs could grow even more significantly than estimates provided by Devinir Research if Republicans succeed in their efforts to repeal and replace the ACA. If ACA policies remain in place, the total value of assets in HCAs would reach approximately $99 billion in 2021, according to estimates provided Limburg.

However, that figure could grow to $435 billion if Republican-led healthcare reform is implemented.

Filed Under: Payer Health Law
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