AFCM Interviews First HSA President, William West, M.D.
[Continued from Page 1]
AFCM: Who are your customers?
WW: We have every type of customer: a truck company,
sandwich shops, housewives, widowers, self-employed artists, and
people fresh out of college who never had any insurance. The truck
company, based in Los Angeles, has 24 employees and they all have a
Health Savings Account. Every year, the firm funds up to $ 1,600.00
for each employee and $ 3,200.00 for [those employees who choose] a
family plan. First HSA is the administrator, so customers just deal
with First HSA. The average account balance is $ 1,500.00, so people
do use their HSAs. 80 percent of HSAs are held as individuals, 20
percent are held by those in group [plans]. California is our
largest client state, with Pennsylvania second, and Ohio,
Connecticut, Texas are also strong. We have customers in every state
except Maine, where no product is available [due to Maine’s massive
government intervention]. We have over 17,000 accounts with $800
million in assets.
AFCM: How do employers respond to First HSA’s products?
WW: Very well. We offer unlimited checkbook access, we
don’t have hidden fees, we’re [a] big [presence] on the Web. Most
people coming to us do so through their own independent research.
AFCM: Are you concerned about the delay in government
regulation of HSAs affecting the market?
WW: It has slowed the acceptability of HSAs by large
companies. We had no product available until July . We still
have some [insurance] partners who won’t have a product until July
2005. In fairness to the Department of Treasury, they did get the
rules out faster than usual. Most unanswered questions relate to
uniqueness in plan design. One question that has arisen has to do
with catch-up contributions. If you have a family plan, and the
account is in one individual’s name, can both individuals make
catch-up contributions? Treasury has said no.
AFCM: The Bush Administration is considering making HSAs a
tool for helping others. Are you troubled by the idea of new
regulations on HSAs?
WW: Definitely. The government covers six out of ten
Americans and we are [already] on a slippery slope to
medicine. There’s a potential for any free market product to turn
into a conduit to socialized medicine. That’s why First HSA belongs
to Americans for Free Choice in Medicine (AFCM).
AFCM: How does First HSA set
interest rates on Health
WW: We worked with the bank [Leesport Bank, First HSA’s
trustee for HSA funds] in getting them to understand that, while
these are high transaction accounts, [setting rates higher is]
worthwhile to gain market share. There are fewer transactions than
there are on traditional checking accounts. We offer 4.15 percent on
balances over $ 15,000.00—about one percent of customers have over $
15,000.00. Most clients have between $ 1,000.00 and $ 5,000.00 in
their Health Savings Account.
AFCM: What challenges do you face?
WW: We are trying to change the nomenclature with HSAs.
What’s interesting is that, when you talk to employees, they
instantly want to know how they lose with HSAs. There’s always one
guy whose light bulb goes off and he asks: “You mean I get to keep
this money year after year?” When you tell him yes, he usually asks
twice. One of our major problems is that the people purchasing
health insurance rely on insurance agents, who [often] have a
disincentive to sell HSAs. But our retention rate on HSAs is 98
AFCM: Do you offer brokerage accounts?
WW: Yes. We offer
investment options. When an account
reaches a threshold of $ 3,000.00, the customer can open an
investment subaccount in stocks, bonds, Money Market funds, mutual
funds. But most people look at their HSAs as their health insurance.
AFCM: Does First HSA offer online account management?
WW: Yes. We offer full
Internet access. We’re working on
online banking with integration of the investment subaccount. It’s
secure and completely encrypted [for security]. I thought the
medical profession was regulated—believe me, the banking industry is
worse. I have a lot of respect for the banking industry.
AFCM: What type of training do you provide to employees?
WW: There are 32 employees dedicated to HSAs, with 11 at
First HSA. Each employee goes through a mini internship and each
employee has an HSA, to which First HSA contributes.
AFCM: What is First HSA's marketing philosophy?
WW: Our biggest marketing right now is to insurance
companies, large employers and large third party administrators. We
work with an outside marketing agency. We do Web advertising through
Google, on a cost-per-click basis, and we try to stay in the top
five for positioning in the most important keywords [used in
searches]. We have a quota so you might not see us after nine or ten
pages [of search results] because we’ve blown through the quota.
People searching visit the First HSA site, go to [the Web page
about] fees and rates, then they go to the [enrollment and rollover]
forms. About 30 percent of users return the forms. I am proud to say
that the first MSA customer in the nation transferred his money to
First HSA [from another Health Savings Account administrator] in
AFCM: Would you consider selling First HSA?
WW: Every hour of every day we have offers, from huge
venture capital firms to larger financial institutions. There are no
current plans to merge First HSA. We’re open to buyers, but we’re
not selling. We would like to take HSAs to the next level.
Scott Holleran, Editorial Director
Copyright © 2005 Americans for Free Choice in Medicine. All rights reserved.
For reprint permission, contact AFCM.