AmEx Drops HSA Card as Market Slows

American Express Co.’s recent decision to exit the Health Savings Account (HSA) market follows mixed numbers on consumer adoption of the payment plans.

Health Savings Accounts allow workers to make tax deductible contributions for their healthcare spending. The theory goes that workers will shop around for the best deal for medical care when using their HSA, thus lowering spending on healthcare.

The healthcare sector is the fastest growing segment in the collections industry as costs rise and as many as 50 million Americans go without health insurance over the course of a given year.

American Express had teamed with insurance giants Cigna and WellPoint to offer its HealthPayPlus debit card product for the HSA market, according to the trade publication American Medical News. AmEx said it would drop HealthPayPlus by the end of this year because of the slow consumer uptake of HSAs and its costs to develop the program.

Various studies valued the HSA market at $6 billion this year and projected it could grow to $50 billion in 2011. But other reports are less optimistic.

A study by America’s Health Insurance Plans found that 4.5 million consumers were enrolled in the plans in January, 1.3 million more than last year. But a study this spring from Watson Wyatt Worldwide and the National Business Group on Health found that 38 percent of employers offered the plans. Enrollment in HSAs was at 8 percent of company staff, only 1 percent more than in 2006.

Some observers noted however that the AmEx debit card may have faced difficulty because the company’s cards are accepted at fewer locations than such competitors as MasterCard and Visa. AmEx charges merchants a higher fee to accept its card, possibly turning off some medical practitioners, the Medical News reported.