Enrollment In Health Savings Accounts Increases, Particularly Among Higher-Income People, GAO Report Finds

Main Category: Health Insurance / Medical Insurance
Article Date: 02 May 2008 - 11:00 PST

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On average, people enrolled in high-deductible health plans with health savings accounts in 2005 had adjusted gross income of $139,000 compared to $57,000 for other taxpayers, according to a Government Accountability Office report released on Wednesday, CQ HealthBeat reports(Reichard, CQ HealthBeat, 4/30). Separately, a report released on Wednesday by America's Health Insurance Plans found that enrollment in HSAs increased by 35% since early last year to 6.1 million people (Knight, Dow Jones, 4/30).

HSAs allow individuals to deposit up to $2,900, or $5,800 for families, per year in the account tax-free, and the funds roll over from year to year. The funds can be withdrawn for medical expenses or saved "for future needs, including retirement," according to the AP/San Francisco Chronicle (Freking, AP/San Francisco Chronicle, 4/30). According to the GAO report, HSA contributions reported to the Internal Revenue Service in 2005 were more than twice withdrawals at $754 million and $366 million, respectively (Dow Jones, 4/30). GAO also found that 41% of HSA users who made contributions in 2005 did not withdraw any funds that year (Johnson, CongressDaily, 4/30). In addition, the report found that four out of 10 people who enroll in high-deductible plans did not open an HSA even though they were eligible to do so. People cited a lack of information, cost or the belief that they did not need the accounts as reasons for not enrolling.

The AHIP report found that more than a quarter of new enrollees in high-deductible health plans paired with HSAs previously were uninsured. The report also found that enrollment in the plans represents 3.4% of the private insurance market (AP/San Francisco Chronicle, 4/30).

Democratic Scrutiny
House Oversight and Government Reform Committee Chair Henry Waxman (D-Calif.) and House Ways and Means Health Subcommittee Chair Pete Stark (D-Calif.) said that the GAO report shows that HSAs are not being used by low- and middle-income U.S. residents who are the most likely to be uninsured. Stark said, "The GAO confirms that HSAs are not the way to meet the health care needs of most Americans," adding, "Instead, they are an effective tax shelter for people whose average incomes are nearly triple that of average tax filers." Waxman said, "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" (CQ HealthBeat, 4/30). Waxman and Stark said that Congress should require HSA enrollees to prove withdrawals from the accounts are for medical expenses.

AHIP Response
Karen Ignagni, president and CEO of AHIP, said that the GAO report shows that a typical HSA enrollee deposited $2,100 and withdrew $1,000 in 2005. However, Ignagni said those figures are too low to describe what could be considered a tax shelter for wealthy people, the AP/Chronicle reports (AP/San Francisco Chronicle, 4/30). Ignagni said that "newer data indicate that individuals are not storing assets in these accounts but using them for health care services" (McQueen, Wall Street Journal, 5/1).

The GAO report is available online (.pdf).

The AHIP report also is available online (.pdf).

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