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Published: May 29, 2007

 
 

Health Meets Wealth

Understanding how an individual’s health needs will inform his or her financial needs will reframe the way everyone — consumers, employers, providers, and the health–wealth industry — plans for the future. Employers have always covered most health expenses, but soon employees will have to weave health care into their financial planning. To answer the integrated need, traditional health and financial-services products will be bundled at each stage of the life cycle and, given that medical needs can be so unpredictable, they will have to accommodate great variability.

The financial-planning life cycle provides the real insight into how the new health–wealth arena might develop. For consumers, employers, and providers, the products will become more innovative over the next decade. We envision products that fall into classic financial-services life-cycle categories. Products for consumers at the stages described above might include:

Transact

  • Debit cards for out-of-pocket payments, with rewards programs; these will eventually use algorithms to draw funds sequentially from multiple consumer accounts.
  • Stored-value or credit cards embedded with electronic health records and plan information with network access, eliminating the need for claims processing.

Borrow

  • Health plan–branded credit cards with rewards programs.
  • Loans to cover out-of-pocket expenses and elective procedures, such as in vitro fertilization, cosmetic surgery, and laser eye surgery, using other assets — for example, a house or 529 education savings plan — as collateral.
  • Nontraditional group insurance for such communities as church groups.

Accumulate

  • Investment options for HSA/HRA funds, à la 401(k) plans.
  • HSAs/HRAs that are combined with flexible spending accounts (FSAs) into portable lifetime tax savings vehicles.
  • Tax-advantaged savings vehicles (like 529s for college) to save for such critical, largely unplanned needs as a heart transplant, with options for rollover and designation of beneficiaries.
  • Consolidated savings vehicles for a broad spectrum of expenses, including education, health care, and child care.

Protect

  • Supplemental risk products (e.g., gap insurance for non-covered services, especially experimental drugs and treatments).
  • Melded health–retirement benefits packages.
  • Multipurpose life-stage insurance that morphs over time from health insurance to long-term-care insurance to a death benefit.

For employers, additional product possibilities include ways to move health-care liability off the balance sheet, more innovative cafeteria plans that combine financial services and health benefits, and protection against catastrophic employee expenses.

And for providers, we might see products that provide real-time full payment for services rendered (both consumer and health plan components) and that assume risk for bad debt; outsource all business activities, including payroll and benefits; and automate point-of-service billing and collection with the ability to check a patient’s spending against the remaining deductible in real time, and assign responsibility to the plan or consumer accordingly.

For employers, providers, and consumers, we’ll see a heightened need for advice. They will need help with comprehensive planning and help in choosing the right plans and offerings from an increasingly complex menu. They will also need decision support tools that calculate costs and, eventually, quality of providers and procedures, and that factor health-care needs into financial planning. For employers, we might someday see products that advise on everything from the best mix of retirement and health-care benefits to explicit links between those benefits and productivity.

How and When to Play
Many players have started to address the needs highlighted by our framework. Most financial-services firms are taking a low-risk route into the health–wealth arena by repackaging their existing products and services. For example, J.P. Morgan Chase and others are marketing existing custodial accounts as HSAs/HRAs that tap into ATMs, checking accounts, debit cards, interest-bearing deposits, and mutual funds. In addition, they are cobranding debit cards with health plans, offering transaction processing and providing credit for health-care expenses. Among the more aggressive players today is Fidelity. Its new Health and Wealth group builds on the decision-making tools and provider ratings produced by its partners, WebMD and Health Dialog, to augment its core retirement planning with health advisory services.

 
 
 
 
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