MAY 4, 2005 -- Sales of high-deductible health plans sold in connection with health savings accounts (HSAs) have more than doubled in the past six months to the point where they are now covering a total of 1,031,000 people, America's Health Insurance Plans (AHIP) said Wednesday. "HSAs are steadily gaining momentum in the marketplace" and now are "a valuable part of the suite of products" offered by the nation's health insurers, said AHIP President Karen Ignagni.
Sales of HSAs, authorized under the Medicare overhaul law (PL 108-173), totaled 438,000 last September, after making their first appearance on the market in early 2004. President Bush has made the plans a key feature of his vision of an "ownership society" in which individuals have greater control over their health care and their retirement accounts.
HSA holders or their employers contribute pretax dollars to the accounts, which grow tax free, and which are used to pay health expenses not covered by the high-deductible health plans. Account owners pay no taxes on withdrawals, unless used after age 65 for non-health care purposes.
Conservatives are pitching them hard as a way to make individuals more responsible for their own health and health care expenses. Boosters say the accounts will make consumers more price sensitive, forcing the health care industry to deliver more efficient care. They also note that the premiums are relatively affordable, and claim that they will help cover the uninsured.
Liberals, however, say the accounts will draw young and healthy workers in companies away from traditional comprehensive employer coverage, making it unaffordable for older and sicker Americans.
But AHIP says the sales data "shatters the myth that these new products only attract young and healthy individuals." Nearly half of the people covered by the HSAs are over the age of 40, the insurer lobby said. According to HSA sellers tracking such data, 37 percent of buyers who purchased individual HSA policies were previously uninsured.
But it may be too early to draw any conclusions from the study about the impact of growing HSA sales on the mix of older-and-sicker versus younger-and-healthier workers in traditional employee plans.
"The question is, what other choices did enrollees have?" said insurance analyst Len Nichols of the New American Foundation, a centrist think tank. "Fear of selection is strongest where there are multiple options. If the whole company only has one plan, as most small employers do, enrollment growth is not related to selection issues at all. If the growth was in large firms with multiple choices, including more comprehensive insurance, then the myths would indeed be challenged."
Of the 1.03 million sold, 556,000 HSAs were sold to individuals, 162,000 to large groups, defined by AHIP as employers with more than 50 workers, and 147,000 to small groups, defined as having 50 or fewer employees. The total doesn't add up to 1.03 million because of incomplete data on the status of the remaining buyers.
Of buyers in the individual market, 48 percent were under the age of 40, and 52 percent were 40 or older. In the small group market, 56 percent were under the age of 40, and 44 percent were 40 or older. In the large group market, 55 percent were under age 40, and 45 percent 40 or older.
AHIP spokesman Larry Akey said the sales figures did not include data on the number of HSA buyers who had the option of other types of health coverage. But he said that based on anecdotal information, it appears that HSA in the large group market were generally offered as an option.