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Home > Free-Market Toolkit > William West Interview, Page 1 > Page 2
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AFCM Interviews First HSA President, William West, M.D.

February 2005

[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 [2004]. 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 socialized 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 Savings Accounts?

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 percent.

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.

First HSA TeamAFCM: 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 2001.

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.
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