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Home > Free-Market Toolkit > Kirk Howwisch Interview, Page 1
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AFCM Interviews HSA Bank President, Kirk Hoewisch

January 2005

HSA Bank, 2005The year was 1901 and someone in Howards Grove, Wisconsin, observed that the first automobile to appear in town was driven by a man from nearby Sheboygan. A century later, the town is making its mark on another new vehicle—which has the potential to revolutionize how one pays for medical treatment. It is the Health Savings Account (HSA)—widely available to most Americans in the growing money-for-medicine movement—and this Midwestern town’s bank is playing a prominent, if unlikely, role in advancing the radically free market-oriented idea.

State Bank of Howards Grove, 1913Back in early 20th century Wisconsin, German settlers, farmers, and small businessmen found that they needed money to establish their businesses. They needed a bank. Howards Grove got one in 1912 when 37 individuals provided $10,000 to form the State Bank of Howards Grove, which opened for business on January 27, 1913. The first day’s deposits: $3,542.42.

In time, the bank—like the nation—had its troubles, including the Depression in the early 1930s, when State Bank of Howards Grove was forced to halt business. But the bank bounced back, re-opening less than a month later when a band of new investors stepped forward with more money.

That brand of can-do confidence also possessed a smart banker named Bradley Yocum, who grasped the profit potential for Medical Savings Accounts (MSAs, the predecessor to Health Savings Accounts), to act on his judgment that something closer to real capitalism is possible. Thanks to Yocum, today, the bank is among America’s largest custodians of Health Savings Accounts (HSAs). Now operating under the name HSA Bank, the small but feisty Howards Grove bank is a leader in free market medicine.

AFCM recently talked with HSA Bank President and Chief Executive Officer Kirk Hoewisch about the bank’s unique philosophy, its history, and its commitment to Health Savings Accounts (HSAs). Hoewisch also discussed HSA Bank’s September, 2004, merger with Webster Financial, which owns the largest independent bank in southern New England.

Bradley Yocum and Kirk HoewischThe 42-year-old Hoewisch joined State Bank of Howards Grove in 1996 as Vice President of Operations. Within a year, he was leading the initiative to offer MSAs to the bank’s customers. Hoewisch’s modest demeanor belies a fiercely independent and competitive drive, which has served the bank well; Hoewisch is primarily responsible for HSA Bank’s remarkable success in establishing a niche in market-driven medicine at a time when dominant intellectuals—and many bankers and businessmen—insisted that the future of health care is rooted in government intervention.

Developing a simple, easy-to-navigate Web site, combined with an intelligent sales strategy mobilizing a small but impenetrable grass-roots network of independent insurance agents, Hoewisch integrated new technology and rational business principles to establish major market share in America’s first major advance toward free choice in medicine in generations.

Please note that HSA Bank is a member of Americans for Free Choice in Medicine (AFCM).

Kirk HoewischAFCM: Which principle defines HSA Bank?

Kirk Hoewisch: Philosophically, capitalism. Specifically, the idea of the entrepreneur.

AFCM: Your predecessor is responsible for introducing the MSA—now the HSA—to your customers. How did he do it?

KH: Bradley Yocum was brought on board [as president] in 1995 when banks were getting out of problem loans. He came with a strong background in commercial lending and he had switched the focus from mortgages to commercial loans. As a former auditor and controller, he knew where to cut costs. He also knew every other banker in the state so he used those resources. Within two years, he turned the bank around. One day [in 1997], he popped in to say he had attended a Medical Savings Accounts [MSAs are the precursor to HSAs] seminar. He said that most of the attendees had left by lunch and he thought that would be a good sign [that the bank could dominate the market]. He asked whether our software could handle MSAs. I had read about Medical Savings Accounts in the Wall Street Journal and I thought he was talking about offering them to our staff. He said he wanted to offer HSAs to our customers.

AFCM: What did you think of HSAs in principle?

KH: The concept made sense. I liked the idea of high-deductible health insurance, the idea of paying your own money for services and shopping for price and quality. This idea of putting the money back in the consumer’s hands made sense to me. I’m a free market capitalist and I believe the government basically should stay out of our lives. They can handle the military and some other things. But that’s about it.

AFCM: Who are the bank’s customers?

KH: One third mortgage, home equity and personal loans, one third commercial and real estate loans and one third agriculture loans. From a deposit standpoint, out of $150 million in deposits, $42 million is non-Health Savings Account and $108 million are MSA or HSA deposits, not including brokerage accounts, which have $20 million in deposits. HSA Bank’s total Health Savings Account assets are $128 million. 40 percent of HSA Bank customers are covered as an individual, with 60 percent in group health insurance. The average group is 15 employees per group, though that doesn’t really tell the size of the employer, because not every employee enrolls in the group HSA plan.

AFCM: How do employers respond to HSA Bank’s products?

KH: It’s difficult for me to say because we’re not the agent or the broker trying to sell the concept, so what we see is all positive, though I’m not hearing negative [response] from agents and brokers. Large employers are hesitant [about offering Health Savings Accounts] but most of them are offering multiple options [of health care benefits to employees]. A third of large employers seem to like HSAs right away. The negative response comes from employees—those who used to pay 25 bucks a month, with their employers picking up most of the tab. I have friends who hate the idea [of employer-sponsored HSAs]. The initial reaction is a concern that they’ll end up paying more for health insurance. I explain that the employer is allowed to fund the Health Savings Account and I ask: ‘How many times do you go the doctor in a year?’ I do the math, I show them and I explain that there are restrictions with managed care plans that there aren’t with HSA-compatible health insurance, which generally allows the individual to visit any doctor or hospital. But there is also this entrenched notion among some people that health care is a right and that health insurance ought to be free to them, paid by the employer.

Continued on Page 2


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