BearingPoint Predicts Rapid Expansion Of Health Savings Accounts If Universal Health Coverage Programs Are Adopted

Main Category: Public Health
Article Date: 14 Feb 2008 - 1:00 PDT

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BearingPoint, Inc. (NYSE:BE), one of the world's largest management and technology consulting firms, eleased projections for the impact of the most widely touted health proposal across the presidential candidates' platforms - universal coverage - on multiple health constituents. Universal coverage as described in the presidential health platforms, is being applied in California and Massachusetts and requires coverage for all (or nearly all) residents through mandates or incentives, for insurance usually supplied through employers of all sizes. In application, this would increase the offering of high-deductible health plans (HDHPs) and their associated financial accounts. According to BearingPoint's forecast, the implementation of universal healthcare in the U.S. could further impact all health constituents, including increasing HSA projections beyond the current 2012 estimates of more than 20 million new accounts with more than $200 billion in assets.

Many of the presidential candidates are currently discussing the possibility of universal health coverage programs in some form. Most are mentioning plans that may parallel the state initiatives in California and Massachusetts, wherein the employer is required to offer coverage or pay into a pool for employees to secure such coverage. BearingPoint believes that this type of initiative would increase adoption of HDHPs (a.k.a. "low-premium" health plans) as a primary coverage vehicle, enabling more people to open accompanying save/spend/invest accounts - HSAs. The increase in individual HSA accounts to more than 20 million and the growing trend of consumers paying out-of-pocket for medical expenditures are driving financial institutions to evolve. Insurers, banks, investment managers and card companies are seeking out new platforms, systems, practices and strategies to serve employers and consumers in their new healthcare spend/save/invest needs.

"Universal coverage programs could significantly change the way Americans navigate and manage healthcare, leading consumers to require new financial accounts and tools to effectively spend/save/invest funds related to healthcare services," said Kirsten Trusko, practice lead of the BearingPoint's Banking Insurance Group. "As they enter unfamiliar territory, financial institutions across the country will depend on new platforms and systems to support the products, services and tools developed for consumers."

The Company's views on the potential impact of universal healthcare program adoption, and therefore, multiplied HDHPs and HSAs include the following:

- Insurance Companies: A high percentage of the approximately 40 million uninsured Americans could be added to the commercial health insurance infrastructure, which is currently spending 30 percent of its revenue on administration due to outdated systems, poor interoperability and manual processes. Health plan providers may need to invest in revamped systems and processes to support the potential growth from the addition of 20 to 40 million more currently uninsured consumers.

- Health Providers: Traffic flow in the emergency room (ER) could become more manageable as additional people become insured, thus seeking primary care through traditional options rather than overusing ERs for non-urgent care. This could result in a reduction of write-offs for accounts receivable by hospitals and other health providers. Additionally, the increased "out-of-pocket" payments associated with traditional and HDHP plans could raise the need for real-time access to eligibility, co-pay, deductible status and pricing at the point of care.

- Banks: HDHPs and HSAs are already experiencing growth among the insured and are estimated to reach more than 30 percent of the commercially insured population by 2012. Add to that the 20 to 40 million Americans who could be entering the healthcare system from the uninsured ranks and the number of HDHPs and HSAs could climb. Banks and/or investment managers could expect new deposits in HSAs to grow to more than $200 billion in the next five years, creating far greater consumer need for streamlined methods of information access, spending, saving and health financial planning.

- Card Networks: Current 2012 estimates for healthcare spending are $4 trillion each year, according to the National Coalition on Healthcare. The volume of data and money clearing HSAs and related accounts will raise new requirements for security, fraud, data types/formats, timing and access to effectively serve consumers, providers, carriers and other stakeholders. Networks may work to assure systems (current or new) can accommodate industry changes and growth.

- Investment Banks: Creators of HSAs have referred to them as 401(k)s or IRAs for health. With the potential for more than $200 billion in new consumer deposits by 2012, investment managers will be overseeing more money and customers. However, while investment managers handling retirement funds are typically managing funds held until a retirement date, HSA funds may need to be accessed regularly or early in the event of medical need. Therefore, investment banks will need transactional capabilities beyond traditional investment platforms and may seek partnerships or acquisitions to secure them.

- Consumers: 87 percent of employers will offer consumer-directed healthcare accounts in the next years (including HSAs) with 50 percent of the HSA employers contributing money into these accounts. In order to navigate these new products, consumers will need tools to: 1) understand and compare quality and costs for healthcare services and 2) plan what they will need to save/spend/invest on healthcare, now and into retirement.

Along with its in-depth market forecasts, BearingPoint has also developed comprehensive financial and technology models to help financial services companies understand and prepare for the possible changes in the healthcare marketplace that could result from the implementation of universal health coverage. Additional information about BearingPoint's services and perspectives is available at http://www.BearingPoint.com.

About BearingPoint, Inc.

BearingPoint, Inc. (NYSE: BE) is one of the world's largest providers of management and technology consulting services to Global 2000 companies and government organizations in 60 countries worldwide. Based in McLean, Va., the firm has more than 17,000 employees focusing on the Public Services, Financial Services and Commercial Services industries. BearingPoint professionals have built a reputation for knowing what it takes to help clients achieve their goals, and working closely with them to get the job done. Our service offerings are designed to help our clients generate revenue, increase cost-effectiveness, manage regulatory compliance, integrate information and transition to "next-generation" technology. For more information, visit the company's Web site at http://www.BearingPoint.com.

Some of the statements in this press release constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations, estimates and projections. Words such as "will," "expects," "believes" and similar expressions are used to identify these forward-looking statements. These statements are only predictions and as such are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are based upon assumptions as to future events or our future financial performance that may not prove to be accurate. Actual outcomes and results may differ materially from what is expressed or forecast in these forward-looking statements. As a result, these statements speak only as of the date they were made, and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

BearingPoint, Inc.