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Loan Marketing and the Affordable Care Act

Banks and credit unions did a sterling job of growing their loan portfolios in 2015. Banks saw their asset side of their balance sheet grow by six percent.1 Growth at credit unions was even stronger, shooting up by about 10.5 percent, driven by auto and home lending.2

It is expected that borrowing will continue to be brisk in 2016.

But financial institutions can complement demand in these categories by also focusing on medical loans. According to the Washington Post, more than 11.3 million Americans have signed up for the Affordable Care Act (ACA), coming from all 50 states.

Certainly providing healthcare insurance to Americans is a good thing. Unfortunately, the ACA can be expensive. The average premium for an ACA plan purchased through the healthcare.gov website is $408 a month, nearly $5,000 a year, a nine percent increase over 2015 costs.3

Like most things in life, expect costs to continue to go in one direction in 2017 … up.

Pricey premiums are only part of the story. It is estimated that better than a third of those in the ACA exchange have annual family deductibles of more than $11,000.4

Ouch!

Here is where banks and credit unions can address a market opportunity … healthcare loans. It is estimated that 76 percent of Americans live paycheck to paycheck.5 Should little Johnny or Janey break a leg on the playground today during recess, the typical American family would be hard-pressed to afford medical care.

Whether they are packaged as unsecured signature loans or home equity loans, banks and credit unions may find that promoting healthcare loans to their account holders may gain significant traction.

Peer-to-peer lenders and fintechs already are out there putting these types of loans in front of consumers. Prosper Healthcare Lending comes to mind. Some call this the Point Of Sale lending market, a nearly $400 billion market opportunity.6

Financial institutions would be well served to roll up their sleeves and take a deeper look. When auto and home sales slow down, these types of loans may serve as a viable complement to any institution’s lending program.

 

 

1 FDIC
2 NCUA
3 International Business Times, January 22, 2016
4 InfoStat, November 2, 2015
5 CNN Money, June 24, 2013
6 CUToday

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