Health Savings Account enrollment grew 35% to 6.1 million between January 2007 and the present, according to a survey commissioned by America’s Health Insurance Plans.
At the same time, the chairmen of two House committees charged that the data from a Government Accountability Office study shows that HSAs are nothing more than tax shelters that benefit the wealthy.
The GAO report also noted that, despite their growth, HSAs only represented about 2% of individuals with private health coverage in 2006, the last year for which information was available.
Among tax filers between the ages of 19 and 64, the average adjusted gross income for filers reporting HSA activity was about $139,000 compared with about $57,000 for all other filers. Similar income differences existed across all age groups.
The GAO report said that the total value of all HSA contributions reported to IRS in 2005 was about twice that of withdrawals–$754 million compared with $366 million.
Among all filers reporting HSA activity in 2005, average contributions were about $2,100, compared to average withdrawals of about $1,000, the report said.
Despite the growth in HSA participation, nationally representative survey estimates from 2005, 2006 and 2007 found that more than 40% of HSA-eligible health plan enrollees did not open an HSA, the GAO report said.
Industry officials said they were quite satisfied with the report.
“Employers and individuals across the country and across the age spectrum are choosing HSA plans, which are now an important part of the portfolio of coverage options offered by health plans,” said Karen Ignagni, president and CEO of AHIP.
Janet Trautwein, executive vice president and CEO of the National Association of the National Association of Health Underwriters, said the new enrollment and coverage statistics “illustrate that HSAs continue to be a dynamic, consumer-friendly and increasingly popular health insurance option.”
But Rep. Henry Waxman, D-Cal., chairman of the House Oversight and Government Reform Committee, and Rep. Pete Stark, D-Cal., chairman of the Health Subcommittee of the Ways and Means Committee, said the GAO report shows that “instead of being used by low and middle-income Americans most likely to be without health insurance, HSAs are increasingly a popular tax shelter option for wealthy taxpayers.”
The report confirms that “HSAs are not the way to meet the health care needs of most Americans,” Stark said. “Instead, they are an effective tax shelter for people whose average incomes are nearly triple that of average tax filers.”
Waxman said the findings “provide further evidence that we need to reexamine whether this is the right way to use the government’s resources to address our health care needs.”
They added that the GAO’s findings are bolstered by “HSA advocates’ extreme opposition to legislation passed earlier this month in the House, H.R. 5719, that would require HSA enrollees to substantiate that HSA withdrawals were used for allowable medical expenses.”
They charged that data from at least one company indicate that HSA funds appear to have been spent on “escort services, at casinos and bowling facilities and in other non-health related areas.”
The Congressmen noted that Flexible Spending Accounts, a different tax-preferred health account with fewer tax breaks than HSAs, require substantiation. “In addition, the federal government requires far more onerous verification standards to qualify for Medicaid and for Part D low-income subsidy,” they added.
The AHIP survey estimates of the contributions employers made to employees’ HSAs in 2007 varied. One employer survey reported average contributions for single coverage of $626 among large employers, while another employer survey reported average contributions for single coverage of $806 among small and large employers. More than a third of surveyed employers that offered HSA-eligible plans made no HSA contributions.
Other findings of the AHIP study:
–30% of individuals covered by an HSA plan were in the small group market, 45% of individuals covered by an HSA plan were in the large group market, and the remaining 25% were in the individual market.
–HSA products accounted for 31% of new coverage issued in the small-group market. Individual market consumers selected HSA products for 27% of their new purchases of health insurance.
–HSA plan enrollment as a percentage of individuals with private coverage is estimated to be highest in Minnesota (9.2%), Louisiana (9%), Washington, D.C. (8.7%), Vermont (7.5%) and Colorado (7.1%).
Trautwein said NAHU will continue to promote HSAs as a way of helping more Americans afford health insurance. “HSAs give consumers a reason to be value-conscious shoppers in the health care marketplace and when patients are paying more attention to the cost of health care and demanding value for their dollars, total health care spending will decrease.”