Some eye-popping trends are emerging in the CDHC marketplace even in the dog days of summer.

Two signs popped up this week that CDHC accounts are evolving. Great-West is touting a new product which we view as an "HRA light" version. Basically, the product is an HRA that carves out non-discretionary spending for things like hospital care and emergency services. Prevention coverage and above-the-bridge coverage appear to be identical to an HRA. The savings are also almost identical to an HRA, according to a Reden & Anders analysis.

A Humana study in July came to almost the opposite conclusion. It found that Humana's SmartSuite product, which is also an "HRA light" version, achieved its biggest savings by reducing inpatient hospital claims costs. That's pretty much the exact opposite of Great-West's product, which carves out inpatient care, yet reaches a similar level of savings as Humana.

CDHC Spurring Creative Thinking

Industry experts such as Bill Boyle, editor of Consumer Directed Healthcare Newsletter  believes these developments are another sign of the creative thinking spurred by CDHC providers.

On another front, MasterCard's TowerGroup research subsidiary recently predicted that nearly 2 million HSAs would be opened by year end, and that the total could exceed 6 million by 2010. The Needham, Mass., firm predicted that HSA assets under management will swell to between $10 billion and $26 billion by 2010.

A related product, the flexible spending account, is growing faster, TowerGroup said. The firm expects 23 million of them by 2010.

The HSA Bank division of Webster Bank in Waterbury, Conn., has amassed 162,000 HSA accounts and about $210 million of deposits. Nathaniel C. Brinn, the division's chief executive, said the accounts do not generate fat margins. "It's profitable for us, but it's a low-margin business," Mr. Brinn told American Banker.

HSA Bank uses a sort of clearing approach to the business, working with outside providers to offer a seamless package.

Alliance Focused

HSA Bank works with insurance carriers, administrators, specialty software platforms, card providers, insurance agents, and consultants, he said. Running such a business includes lots of investment in things like a call center and phone staff knowledgeable about not only health insurance but also tax-law changes, he said.

"If someone is not going to really make a major investment in the business, it is probably not going to be a profitable business for a lot of banks," he said.

According to this newsletter’s reporting staff, HSA Bank has $190 million of its health savings account assets in bank accounts and $20 million in linked brokerage accounts provided through Fiserv, Mr. Brinn said.

Tower said financial institutions can take advantage of the consumer payments part of such accounts, specifically the trend toward using payment cards.

But third-party vendors, processors, and health-care providers are "aggressively exploring these same opportunities," the research firm warned. Health-care providers and the consumer payments industry may end up cooperating or competing for health-care account business, it said.