HSAs continue to expand, even as programs change

Filed under: Health Care |

Health savings accounts will continue to grow between 40 percent and 50 percent annually during the next five years. But that growth will be marked by rapid change and serious growing pains.
In “HSAs: Moving beyond the Growing Pains,” Celent examined impediments to growth in both high-deductible health plans and health savings accounts. The report shows that both growth and revenue have been disappointing because providers have underestimated the transition to HDHP-HSAs.
Celent said that employers and providers offered inadequate pre- and post-sale education, insufficient decision-making tools and limited employer funding of accounts. Consumers are overwhelmed by the choices.
But that will change during the next two years, said Alenka Grealish, author of the report and managing director of Celent’s banking group.
“The next two years will mark a period of tearing down and rebuilding at select providers and stagnancy and exiting at others,” she said. “The remodelers will gain market share during the expected strong growth years of 2008 and 2009.”
During the next 24 months, the market will experience rapid change as consumers shop for better offers based on price and customer service, she said.

HMO revenue grows

Reports to the Colorado Division of Insurance show that revenue continued to grow for Colorado’s health maintenance organizations.
Total revenue grew to $2.9 million during the first three quarters of 2007, up from just more than $2.8 million during 2006. Before tax net income grew to more than $200 million.
Kaiser experienced the largest growth, an increase of nearly 13 percent, to $1.5 billion.
HMOs spending as a percentage of revenue used for health care costs varied widely.
• Kaiser — 88.1 percent
• Pacificare 80.2 percent
• ColoAccess 81.9 percent
• Rocky Mountain HMO 89.6 percent
• Aetna 84.3 percent
• Cigna 87.3 percent
• DenHealth 86.2 percent
• CO Choice 88.1 percent
• United Health Care 89.4 percent

Big Pharma spends more on promotion than research

The U.S. pharmaceutical industry spends twice as much on promotion as it does on research and development.
That’s the report from two York University researchers, who based their estimate on data collected from the industry and doctors. The results show that the U.S. pharmaceutical industry spent 24.4 percent of the sales dollars for promotion and only 13.4 percent for research and development. Total U.S. domestic pharmaceutical sales were $235.4 billion.
The research appears in the Jan.3 issue of PLoS Medicine, an online journal published by the Public Library of Science.
The authors examined the 2004 reports of IMS Health and CAM Group, two international market research companies that provide the pharmaceutical industry with sales/marketing data and consulting services. IMS obtains its data by surveying pharmaceutical companies, while CAM surveys doctors, which explains discrepancies in the data they provide.
The researchers used 2004 as the comparison year because it was the latest year in which information was available from both organizations.
CAM reported that total promotion spending by the U.S. pharmaceutical industry was $33.5 billion in their 2004 report, while IMS reported $27.7 billion for the same year.
Amy Gillentine covers health care for the Colorado Springs Business Journal.