Wednesday, October 22, 2008
Health insurers reinvent themselves as money managers
David Bess, a respiratory therapist from Grass Valley, Calif., wears a fake head bandage as he demonstrates at the America's Health Insurance Plans convention at San Francisco's Moscone Center. Many rush to open banks as more Americans open health savings accounts, a tax-sheltered way to pay medical bills. Managing that money is more profitable than offering health insurance.
Federal banking regulators insisted on classifying WellPoint as a healthcare company. And that was interfering with its efforts to open a bank. The Federal Reserve Board eventually agreed that the company's core insurance business could be considered financial services.
That a medical insurer would agree to keep a lid on healthcare expenditures so it could get approval to open a bank illustrates a fundamental change in the industry: Insurers are moving away from their traditional role of pooling health risks and are reinventing themselves as money managers -- providers of financial vehicles through which consumers pay for their own healthcare.