Mercator Blog

Use of Healthcare Accounts in the U.S. Is Booming as Healthcare Costs Rise
Date: November 28, 2016
Sarah Grotta
Director, Debit and Alternative Products Advisory Service

Market forces have had a profound impact on the ways in which consumers save and pay for their health insurance. These forces include the growing need for services for an aging population, the availability of new treatment options, the consolidation of hospitals, and sweeping government policy changes, including the passage of the Patient Protection and Affordable Care Act (a.k.a. Obamacare) in 2010.

Regardless of one’s view regarding how healthcare is provided, accessed, and priced in the United States, most people can agree on the following statements:

  • Healthcare costs in the U.S. are rising.
  • Consumers are paying much more out of pocket to cover those costs than they ever have before.

  • The use of Flexible Spending Accounts, Health Savings Accounts, and Health Reimbursement Accounts is expanding.

The use of healthcare accounts in any one of these forms is changing consumer spending and shifting billions of dollars into these account types. With higher healthcare costs, more businesses will rely on these accounts to supplement their employee healthcare plans. Individuals buying health insurance on the government healthcare marketplaces are choosing high-deductible plans, often with an associated saving account. These options have brought a large influx of potential new participants to the market. Members of this new population of healthcare account users spend more of their accounts, leaving less balance to invest, in contrast to consumers who have used this financial service for years for its tax advantages. The new healthcare account customers who quickly spend down their accounts are changing the financial model for account providers. As a consequence, many account providers, including administrators and banks, are selling off their portfolios, a trend that is causing a rapid market consolidation. Those providers choosing to stay or new market entrants will need to strike the right balance between efficiencies and the needs of the new users.

Learn more in Mercator Advisory Group’s research, The Growing Importance of Healthcare Accounts.