WASHINGTON, Feb. 13 (UPI) -- A new range of health-insurance products has blurred the line between health insurance and banking -- and now the Blue Cross and Blue Shield Association has become the first insurer to start its own bank.
The Blue Healthcare Bank offers health savings accounts, flexible spending accounts and other healthcare products to beneficiaries in Arkansas, Idaho, Michigan and South Carolina. Once fully deployed, it will offer services nationwide to the association's more than 98 million beneficiaries.
The goal is to provide integrated financial and health-insurance services to consumers, said Scott Serota, president and chief executive officer of the Blue Cross and Blue Shield Association, during a conference call Tuesday.
"The healthcare system is undergoing some rather dramatic changes," he said. "We strongly believe that any dramatic change needs to have consumers at the center."
As more employers have begun offering tax-free health savings accounts coupled with high-deductible health plans, a slew of banks have entered the market ranging from commercial giant Wells Fargo to smaller banks that focus on healthcare.
But the disconnect between insurers and consumers' bank accounts have, in some cases, created problems for both consumers and healthcare providers. Consumers, unused to being in charge of their own healthcare expenses, often find using their accounts to be confusing.
Healthcare providers, who do not know how much money a patient has in a health savings account, have had trouble gauging whether patients in their care are able to pay for treatment.
The new bank will address both of those problems, said Robert Gross, president and CEO of the Blue Healthcare Bank.
Beneficiaries will be issued a VISA debit card, allowing them to access both their health savings account and their Blue Cross Blue Shield insurance benefits. When they use healthcare services, they will present the card for payment like a credit card.
Based on the electronic information contained in the card, the patient's health savings account and their insurance plan will automatically be billed the appropriate amounts.
Consumers will not need to wrestle with who is responsible for which amount, Gross told United Press International, and they can electronically access information about their account online.
What's more, providers will no longer have to negotiate the tangled payment web either, because the debit card will do much of the work of submitting claims for them, Serota said. "It will essentially allow the physician to be assured of appropriate payments.
"That's the reason we're getting into the banking business," he said, "to get the provider out of the collection business."
Beneficiaries with accounts containing less than $2,000 will have their money invested in securities on their behalf. Those with accounts above the $2,000 threshold will be able to choose from a range of investment options.
Thus far, health savings accounts account for a small share of the health-insurance market, but they are growing rapidly, said Daniel Loepp, president and CEO of Blue Cross and Blue Shield of Michigan.
"Consumer-directed health plans are an emerging market for all of us," he said. "What we're really looking for is making it as seamless as possible. Consumers want to be able to do things easily."
The heft of a national healthcare bank will help out the 33 independent companies that make up the Blue Cross and Blue Shield Association, he said. "We are more and more competing against national companies. (The bank) will give us a real competitive advantage moving forward."
The Blue Healthcare Bank may soon face some competition from within the association's own ranks, however. WellPoint, the largest member with 34 million beneficiaries in 14 states, has applied for a license to open its own bank in Utah.
The process of integrating all the independent association member plans will not be easy, said Mike Gantt, president of the health and insurance group at Fiserv, the company that created the technology infrastructure for the bank.
"It is a significant effort to enable a bank to support (member plans) and meet their needs," Gantt told UPI.
But, from a market perspective, it may well be worth the effort, said Etti Baranoff, professor of insurance and finance at Virginia Commonwealth University.
"It just makes sense," she told UPI. "Why give up business elsewhere when they can create their own option?"
The real question will be what impact the entry of such a behemoth in the existing health savings account market will have, Baranoff said, and other banks may have to offer more competitive prices.
In any case, Blue Cross Blue Shield will probably not be the last new entrant into the healthcare financial services market, she added.
"It's the newest game in town, and everybody's jumping on the train."
