Health savings accounts growing in popularity

More than 6 million people are enrolled in health insurance plans that allow them to also open health savings accounts, nearly double estimates from just two years ago, according to new industry projections.

But critics of health savings accounts were not deterred by the enrollment figures. They released a separate report Wednesday from the Government Accountability Office that said taxpayers with health savings accounts had an adjusted gross income averaging about $139,000 in 2005, versus $57,000 for all other filers.

The tax figures mean the wealthy are using the accounts as a tax shelter rather than as a means to help them afford health insurance, said Democratic Reps. Pete Stark and Henry Waxman, both from California.

Karen Ignagni, president and CEO of the trade group America's Health Insurance Plans, said the GAO's numbers showed that the typical enrollee deposited $2,100 in a health savings account in 2005 and withdrew $1,000. She said those figures hardly represent amounts that could be described as a tax shelter for the wealthy.

Health savings accounts are a relatively new product pushed by the Bush administration as a way to slow rising health care costs. Workers who purchase health insurance plans with a high deductible can deposit up to $2,900 into the account tax-free, or up to $5,800 for families. Consumers can use the money in their account to pay their medical expenses, or they can save it for future needs, including retirement.

Overall, enrollment in such plans represents about 3.4 percent of the private insurance market, said America's Health Insurance Plans, which compiled the latest enrollment projections. The association said more than a quarter of new enrollees were previously uninsured.

The state with the highest percentage of high-deductible enrollees was Minnesota. About 9.2 percent of the state's total enrollment in private health insurance comes through high-deductible plans. Following closely behind were Louisiana, 9 percent; and the District of Columbia, 8.7 percent.

Supporters of health savings accounts say the accounts make health coverage affordable because the insurance policies that accompany them generally require lower monthly premiums.

But critics question whether the poor and those with high medical expenses can afford all the up-front costs. They're concerned the plans are attracting two extremes: those who buy the policy because it's cheaper, but are unable to invest in the savings accounts, and those who use the accounts to generate tax breaks.

The GAO said national surveys indicate that more than four out of 10 people who purchased high-deductible plans don't open a health savings account, even though they were eligible to do so. Participants said they lacked information about the accounts, they could not afford them, or they did not believe they needed them.

Waxman and Stark renewed calls for legislation that would require enrollees in health savings accounts to prove that withdrawals were for medical expenses.

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On the Net:

America's Health Insurance Plans: http://www.ahip.org

Government Accountability Office: http://www.gao.gov/new.items/d08474r.pdf