From time to time I like to check in with Bill Boyles to find out what is happening in the market.

As you know, Bill is the publisher of the Consumer Driven Market Report (for subscription information, e-mail He has been writing health care newsletters since dinosaurs walked the earth. He’s seen a lot of things come and go and has earned his skepticism the hard way. So when he identifies a revolution I take him seriously.

I called him this time because I was on my way to Pittsburgh to keynote the annual conference of the Pittsburgh Business Group on Health. I’ve had a pretty good idea of the direction the market is taking for quite a while, but Bill was able to provide some sharper focus. Here is what I took away from our discussion −

  1. Employees are extremely skeptical of and even hostile to the “legacy” players in health benefits including both government and insurers.

  2. Employers are flocking into defined contribution approaches to benefits, in which they make a fixed contribution and their employees decide how best to spend the resources.

  3. As part of that, employers are offering three different account options — Flexible Spending Accounts (FSAs), Health Reimbursement Accounts (HRAs), and Health Savings Accounts (HSAs).

  4. There is a new industry of “CDHC account administration firms” to manage these accounts and provide support services. [CDHC=Consumer Driven Health Care.] Bill recently completed a survey of these companies.

The survey was of the 10 largest CDHC administrators: WageWorks, HealthEquity, Evolution1, Alegeus Tech, SelectAccount, Aetna PayFlex, ConnectYourCare, United UMR, Bloom Health, and Acclaris. It found that these firms reported a total of 24 million CDHC accounts as of January 2013.

The largest firm had 9.1 million accounts, while the smallest had 330,000.

Bill says these CDHC firms are taking over private insurance. They added 4.9 million accounts in a 12-month period and grew from 11% to 15% market share in one year. The number of accounts increased by 25.7% from January 2012 to January 2013, and is projected to reach 42 million accounts by 2016.

All three types of accounts are growing fast. The number of HSAs grew 34.3% in one year, HRAs by 30%, and FSAs by 18.3%. FSA, remain the most common type of account at 42% of the total, but the others are rapidly catching up.

These firms offer integrated platforms for the three accounts and support consumers with website management, debit and credit cards, and increasing cost and quality information. The last is helped considerably by CMS’s decision to open up its data files to all users.

Notice several things here:

These approaches are protected under the Affordable Care Act. Provided the account is funded by the employer, it does not count against the out-of-pocket limits of the ACA.

Insurance companies are relatively minor players. The core benefits are the accounts, and the insurance may end up wrapping around the account, rather than having the account supplement the insurance.

This means vast amounts of money being controlled directly by the health care consumer. We can’t yet know what impacts this will have on health care delivery, but some of it is already obvious –

  • Concierge medicine.
  • Cash-only physicians.
  • Medical tourism, domestic and foreign.
  • Physician-owned specialty hospitals.
  • Retail clinics.
  • At-home and smart phone lab testing.
  • Brokerage firms to match up patients and providers.
  • Telemedicine.
  • New responsibilities for service providers to manage debts and receivables.
  • Chronic disease services that are more like social work than medicine.

Throw in a growing demand for published prices, and we are off to the races in the greatest transformation of the health care system we have ever see



Greg ScandlenGreg Scandlen is the founder of Consumers for Health Care Choices, a non-partisan, non-profit membership organization aimed at empowering consumers in the health care system. A former NCPA staff member, Scandlen is an accomplished writer, researcher, and public speaker. He is considered one of the nation’s experts on health care financing, insurance regulation and employee benefits. He testifies frequently before Congress, and appears on such television shows as the O’Reilly Factor, NBC Nightly News, and CNN.

Scandlen has published numerous papers on topics such as health care costs, insurance reform, employee benefits, individual insurance programs, HSAs and HRAs, and every aspect of consumer-driven health care.

He also has served as a fellow in health policy at the Cato Institute and as President of the Health Benefits Group, a consulting firm in Frederick, Maryland.