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August 23, 2008
Use of Health Savings Accounts up 35 Percent
The number of Americans with insurance plans tied to Health Savings Accounts has passed the 6 million mark, according to America's Health Insurance Plans. Health Savings Accounts are tax-favored, individually owned savings accounts that can be used to pay for medical expenses in conjunction with a high-deductible insurance plan. About 6.1 million Americans were covered through Health Savings Account qualified health insurance plans in January 2008, up 35 percent over the same period a year earlier, according to AHIP, a trade association representing insurers. HSA plans have been in existence since January 2004.
About 30 percent of individuals covered by HSA plans worked for small businesses, 45 percent worked for large employers, and 25 percent bought insurance in the individual market. The small-group market is the fastest-growing segment for Health Savings Accounts. The AHIP survey found that Healt Savings Accounts are helping more Americans afford health insurance. HSA plans accounted for 31 percent of new coverage in the small-group market over the past year, and 27 percent of new coverage in the individual market.
The average deductible for the best-selling HSA plans in the small-group market was $2,244 for single coverage and $4,356 for family coverage, according to AHIP.
Average annual out-of-pocket limits were $3,462 for single coverage and $6,690 for family coverage.
Annual premiums averaged $3,189 for single coverage and $8,125 for family coverage.
"The increasing popularity of Health Savings Accounts is a result of managed care's failure," said John Goodman, president of the National Center for Policy Analysis, a Dallas-based public policy research organization. "The best way to control health care costs is to put patients in control of more of their health care dollars."
Critics of Health Savings Accounts, however, pointed to another study. The Government Accountability Office found that taxpayers with Health Savings Accounts in 2005 were, on average, more than twice as wealthy as other taxpayers. Contributions to Health Savings Accounts were more than twice as high as withdrawals. "Health Savings Accounts clearly are attractive to higher-income people who are looking for tax shelters," said Rep. Henry Waxman (D-Calif.). "But they aren't the answer for providing adequate health insurance coverage for the average American. This report provides further evidence that we need to re-examine whether this is the right way to use the government's resources to address our health care needs."
The House recently passed legislation that would require HSA administrators to substantiate that withdrawals from the accounts were used for allowable medical expenses. Republicans who opposed this provision said it was designed to undermine Health Savings Accounts by adding unnecessary administrative burdens. "Democrats should stop trying to dismantle this coverage option," said Rep. Charles Boustany (R-La.). "These accounts help cover the uninsured and lower health costs with preventive care, lower-cost medicines and fewer visits to emergency rooms."
The HSA studies are available at www.ahipresearch.org and www.gao.gov
Posted by Wiley Long at August 23, 2008 01:45 PM