A new report from the Government Accountability Office indicates that health savings accounts are held by few people - but those who do have the tax-advantaged accounts are likely to have higher incomes.
The report, released Wednesday, suggests that HSAs are primarily being used as tax-avoidance strategies, not to pay healthcare bills.
Traditional Congressional opponents to HSAs say the study vindicates their concerns about whether the accounts will achieve their intended purpose.
HSAs are tax-free savings vehicles for money designated for medical expenses and are paired with high-deductible health insurance plans. Money in the accounts can be accrued over their lifetimes. When HSA holders turn 65, they are allowed to withdraw the entire balance tax-free amd spend the money for any purpose, not just healthcare, without paying a penalty.
The GAO study found that the number of HSAs grew to about 4.5 million in January 2007, compared with 438,000 in September 2004. Even so, only 2 percent of individuals with private health coverage have an HAS.
Data from 2005 shows that the average adjusted growth income for those with HSAs was about $139.000, compared with about $57,000 for all others filing income tax statements that year.
The income difference exists across all age groups, the GAO study found. The total value of all contributions reported to the Internal Revenue Service in 2005 was about $754 million, about twice the $366 million that was withdrawn.
The report prompted immediate criticism from Reps. Henry A. Waxman (D-Calif.) and Pete Stark (D-Calif.), who had requested the research from the GAO.
"HSAs are clearly attractive to higher-income people who are looking for tax shelters," said Waxman in a joint statement with Stark.
"But they aren't the answer for providing adequate health insurance coverage for the average American," he continued. "The 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 healthcare needs."
Congress is already raising concerns about the use of HSAs to pay health bills. The House of Representatives passed a bill last month to require HSA trustees to substantiate the withdrawals and distributions from the accounts, beginning in 2011.