American Express stops HSA cards

But experts say the move isn't a sign of trouble for health savings accounts.

By Carolina Procter, AMNews staff. Aug. 20, 2007.

American Express' entry into the health savings account market started with a bang. But the company recently exited with a whimper.

The New York-based financial services company recently announced it would discontinue its HealthPayPlus product. In December 2005, American Express said WellChoice (now a division of WellPoint) and Cigna had signed onto the program, which put the company's name on debit cards backed by patients' HSAs.

However, by year's end American Express will be out of the market. The company cited low adoption and high costs as reasons for its decision.

The HSA market is valued at $6 billion, according to various estimates, with multiple studies concluding the market will be $50 billion by 2011. That inspired many banks and financial services companies to jump into the HSA account management and debit card business.

But growth has come slower than expected. Watson Wyatt Worldwide and the National Business Group on Health in the spring reported that 38% of employers offered consumer-directed health plans, with enrollment in HSAS at 8%, one percentage point more than a year ago.

But HSA advocates say American Express' pullout is more about the company's position in HSAs, and less about the condition of the market.