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Blues Bank Put
On Hold, May Be
Blocked
The Blues plan
to keep its HSA
products
internal was
dealt a severe
and possibly
fatal blow
yesterday when
the FDIC imposed
a moratorium on
new approvals
for that type of
bank arrangement
under pressure
from Congress.
The Blues bank
needs FDIC
approval to
start marketing
a range of
related HSA
products and
debit cards
similar to
United’s Exante
Bank, Blues
officials and
consultants told
us.
The FDIC
six-month ban is
a reaction to
Wal-Mart’s
application,
which generated
a flood of
outrage from
community and
national banks
fearful that all
national
retailers will
bypass existing
banks. There are
61 “industrial
loan
corporations” or
ILCs already
approved, but 14
new applications
are pending
including the
Blue Cross and
Blue Shield
Association
application. The
banks are
allowed to issue
credit cards,
take deposits
and make loans,
but they can’t
offer checking
accounts if
assets exceed
$100 million.
Despite the
Blues Bank
problems, the
national
association is
pressing ahead
with other big
CDH products.
Last week for
example its
NASCO unit
approved a new
contract with
Fiserv
for integrated
HSA-HRA-FSA
debit card
services for its
popular
BlueCard
for national
accounts. The
deal will be
announced in two
weeks.
The FDIC
moratorium is
the latest
chapter in a
two-year debate
over whether
large insurers
should own their
own bank or try
to integrate
with the overall
banking system.
Initially, most
large carriers
like Aetna and
CIGNA and
Harvard Pilgrim
cut deals with
large national
banks to offer
“integrated” HSA
products to
members. But
with the arrival
of large retail
HSA products and
an estimated 60%
of employees
getting their
accounts
elsewhere, even
Exante is now
using an open
model to
maximize HSA
growth.
Our fast take on
this is that
while the early
deals are a good
thing and have
shown some
initial growth,
factors beyond
anyone’s control
will create an
“integrated”
system where HSA
revenues to
insurers come
from many
sources.
Companies which
insist on using
only one FI will
see less than
half the HSA
covered lives as
open
architecture.
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