We are all focusing on the tax cuts, the roll backs and how HSAs aren’t affordable. But let’s talk about where the money goes. HSA increases are a preview of privatized Social Security — the revenue stream from making us put money away to pay for what the government won’t cover.
CNBC has an article called Inside the House Republican $19 billion plan to turbocharge health savings accounts. The article has all sorts of nice words about how good HSAs are but then we get to the money part:
Health savings accounts have grown to an estimated $37 billion in assets and 20 million accounts at the end of last year and reached $41 billion in assets during January, according to Devenir, an HSA consulting firm in Minneapolis.
Given the momentum, Devenir forecasts assets in the accounts could reach more than $53 billion by 2018, a 30 percent increase from 2017. (See chart below.)
Let’s look at the math.
In 2006, there was $1.6 billion held in HSAs. In 2016, there was $37 billion — $31.5 in deposits and $5.5 billion in investments. The 2018 estimate under Make America Sick is $53.2 billion — $44.4 in deposits and $8.8 billion in deposits.
The deposits are straight bank style deposits — and we know banks make money on them. Just to give you a sense, I was seeing around 0.5 to 1.05% annual interest with somewhere between an $18-25 per year account fee. Many accounts scale the interest rate down near 0.05% for account under $2,500. If banks are making .5% on lending that money, they are making $157 million per year. That is not chump change in anyone’s book.
And the kicker will be in the investments. Vanguard published estimates that the average management fee for the funds in an HSA is 1.04% and you add up to 0.5% for the investment manager in case. That is 1.5% — for the additional $3.3 billion, that would be another $50 million per year (on top of the $82 million they make on the $31.5 already in HSAs).
Just another revenue stream that is created by having individuals pay for high deductible plans.