Blue Cross plans to launch Salt Lake-based bank

CHICAGO — The Blue Cross and Blue Shield Association wants to launch a Salt Lake-based bank that will administer its consumer-directed health plans, a responsibility currently shared by third-party financial institutions.

The association announced today that its board of directors has approved development of the Blue Healthcare Bank. The aim is to simplify the administration of health savings accounts and other similar plans offered by Blue Cross insurers throughout the United States, said Scott Serota, president and chief executive officer of the association.

The bank would give those enrolled in Blue Cross plans a familiar, centralized financial institution to monitor and access their accounts, Serota said. Creation of the bank is subject to regulatory approval.

"By being closely aligned and integrated with your benefits, we will be able to ensure that your account is paid properly and that your deductible will be applied correctly," he added.

Health savings accounts (HSAs) can be set up by consumers who have high-deductible insurance plans. Both workers and their employers can deposit money into the accounts, which grow tax free and can be used to pay for medical expenses. Unspent money in the account accumulates and can be invested through the HSAs administrator.

Currently, the HSAs offered by Blue Cross insurers are handled by third-party banks.

Serota said the banking industry should not be concerned about encroachment because the Blue Healthcare Bank would only offer financial services related to the management of the health plans.

"You're not going to be able to have checking accounts," he said. "There is plenty of room for us to work in concert — instead of in competition — with those banks."

The American Bankers Association could not immediately be reached for comment.

The move into the financial services arena could prove to be a lucrative one for Blue Cross.

By 2010, HSA accounts could be holding as much as $75 billion in assets, according to a report by DiamondCluster International Inc., a management consulting firm. As a result, financial institutions could stand to collect up to $3.5 billion from asset management and account fees, according to the report.

UnitedHealth Group Inc. has already launched its own financial institution for the management of consumer directed health plans, the Salt Lake-based Exante Bank.

About 1 million people have enrolled in HSAs and other similar plans since 2003, said association spokesman Chris Hamrick.