Jun 9, 2017

The big business of health savings accounts

George Hodan / Creative Commons

Republicans view health savings accounts — mechanisms for people to set aside untaxed money to pay for medical expenses — as a crucial part of pushing people to have "skin in the game" and pay for their own health care.

A plethora of HSA providers exist, many of which are run through banks or credit unions. UnitedHealth Group, the largest health insurer in the company, has its own HSA affiliate called Optum Bank. A glance at one of the biggest standalone HSA companies, HealthEquity, shows there's a lot of money to be made at running the relatively low-maintenance accounts.

HealthEquity collects revenue three ways:

From health insurers and employers that want to offer HealthEquity's HSA services. Monthly administrative fees (also known as "custodial fees") paid by insurers, employers or members. Fees from providers every time someone swipes their HSA card.

How HealthEquity is faring: Business has been booming as more employers steer workers into high-deductible health plans that are paired with HSAs. But there's been longstanding criticism that HSAs are another tax shelter that don't help lower-income people who don't have a lot of money to set aside for medical care.

HealthEquity collected $55.4 million in revenue in the first quarter of this calendar year, up 26% from the same time a year ago. The bigger deal is HealthEquity's profit, which jumped 74% to $14 million. That means for every $1 HealthEquity gets for handling HSAs, it gets to keep a shiny quarter. That kind of profit margin is on par with the pharmaceutical industry, which usually has the highest margins in health care.

The Wall Street factor: HealthEquity's stock is up 69% since President Trump was elected. That growth has fattened the pay packages of top executives like CEO Jon Kessler, who took home more than $19 million last year.

Go deeper

Updated 41 mins ago - Technology

Twitter: Trump's Minnesota tweet violated rules on violence

Twitter said Friday morning that a tweet from President Trump in which he threatened shooting in response to civil unrest in Minneapolis violated the company's rules. The company said it was leaving the tweet up in the public interest.

Why it matters: The move exacerbates tensions between Twitter and Trump over the company's authority to label or limit his speech and, conversely, the president's authority to dictate rules for a private company.

Updated 55 mins ago - Politics & Policy

Trump threatens to "assume control" of Minneapolis over unrest

Flames from a nearby fire illuminate protesters standing on a barricade in front of the Third Police Precinct in Minneapolis on Thursday. Photo: Kerem Yucel/AFP via Getty Images

President Trump threatened via Twitter early Friday to send the national guard to Minneapolis following three days of massive demonstrations and unrest in the city over George Floyd, a black man who died in police custody this week.

Details: "I can’t stand back & watch this happen to a great American City, Minneapolis. A total lack of leadership. Either the very weak Radical Left Mayor, Jacob Frey, get his act together and bring the City under control, or I will send in the National Guard & get the job done right," Trump tweeted after a police station was torched by some protesters.

Updated 2 hours ago - Politics & Policy

In photos: Protests over George Floyd's death grip Minneapolis

Protesters cheer as the Third Police Precinct burns behind them on in Minneapolis on Thursday night. Photo: Stephen Maturen/Getty Images

Cheering protesters set a Minneapolis police station on fire Thursday night in the third night of unrest following the death of George Floyd, a black man who died in police custody in the city, per AP.

The state of play: Minnesota's governor on Thursday activated the state's national guard following violent outbreaks throughout the week, as the nation waits to see if the officers involved will be charged with murder.