WASHINGTON – The number of people covered by health savings accounts or high-deductible health plans rose to 4.5 million this past January, up more than 40 percent from the previous year.
The tax-advantaged accounts represent just a small percentage of the entire U.S. market. However, the recent data, collected in an annual census by America’s Health Insurance Plans, shows continuing potential for growth.
AHIP’s figures suggest that the most striking growth in HSA accounts was in the group market, where overall enrollment rose to 3.4 million this past January, up 144 percent from 1.4 million in January 2006.
“More employers are getting into the game,” said Roy Ramthun, president of HSA consulting services, a Silver Spring, Md.-based company that offers services and products associated with the accounts.
“Over 60 percent of mid-sized and large employers are offering these accounts for the first time,” he said. “They’re seeing lower cost trends, primarily as a result of changes in their employees’ behavior.”
AHIP noted that the census did not include coverage associated with health reimbursement accounts, which are commonly offered in the large group market.
In the individual market, HSAs are providing health insurance options for more people who previously hadn’t had health insurance. The AHIP study found that 27 percent of new HSA enrollees were previously uninsured.
“HSAs are making health insurance more affordable for low- and moderate-income Americans, many of whom don’t have access to health insurance through their employer,” Ramthun said. “More than a third of individual purchasers have incomes of less than $50,000.”
The accounts are still a relatively new phenomenon – as of January 2007, 65 percent of accounts had been in place for less than one year, the AHIP data showed, and 88 percent of accounts in place in 2006 had annual balances of $2,500 or less.
Law changes approved by Congress in late 2006 are expected to provide additional incentives to use the accounts for healthcare, Ramthun said.
He said projections for growth by the Financial Research Corp. last year predicted that there would be as much as $48 billion in health savings accounts by 2010, compared with about $2 billion in such accounts as of 2006.
The changes in the law will give employers additional flexibility to make contributions for lower-paid workers.
“This is going to help employers drive adoption,” Ramthun predicted.