Enrollment Triples in Plans Offering Health Savings Accounts

WASHINGTON —  Enrollment in high-deductible insurance plans that qualify for contributions to tax-sheltered health savings accounts -- the Bush administration’s way of adding market forces to the health business -- tripled to 3 million people in the last 10 months, the health insurance industry reported Thursday.

“This is a very significant success story,” said Karen Ignagni, president and chief executive of America’s Health Insurance Plans, the trade association for companies that underwrite virtually all such plans.

But the 3 million enrollees in plans that qualify for the accounts represent a small percentage of the 198 million Americans who, as of 2004, were covered by private insurance -- or even of the 46 million who have no insurance at all.

“Is it a success story? Yes and no,” said Paul Fronstin, a health economist with the Employee Benefit Research Institute. “Three years ago, the market didn’t exist. But it still amounts to only a fraction of Americans who have private insurance.”

President Bush has signaled that in his State of the Union address Tuesday, he will ask Congress to expand health savings accounts, which are designed to shift responsibility for buying health insurance from employers to individuals.

Bush has said that those with comprehensive health insurance would benefit from the accounts because they would make more cost-effective healthcare choices if they knew that they would be responsible for much of the expenses. For those who are uninsured, the accounts could make insurance affordable because they are linked to low-cost policies with high deductibles.

Most Democrats have a different perspective. Sen. Edward M. Kennedy of Massachusetts wrote that health savings accounts worked only for the healthy and put at risk the health and resources of the poor.

Contributions to health savings accounts, which were authorized by the 2003 law that added a prescription drug benefit to Medicare, are tax-deductible, and withdrawals used for medical expenses are tax-free. Balances at year’s end can be rolled over into the next year.

Individuals qualify to establish health savings accounts only if they are covered by insurance with annual deductibles of at least $1,050 for individuals or $2,100 for families. The cost of such insurance is typically far less than the price of traditional comprehensive coverage; the administration’s thinking is that the difference would be contributed to the accounts.

Those contributions are limited to the amount of the deductible, with maximums of $2,700 for individuals and $5,450 for families. Ignagni said the high-deductible policies would become more attractive if the tax breaks for the accounts were expanded.

Grace-Marie Turner, president of the Galen Institute, a health and tax policy center in Alexandria, Va., found the incidence of high-deductible insurance policies impressive. “They’re new,” said Turner, whose organization backs increased use of the accounts. “It takes people a while to get used to them.”

Although Ignagni could not say how many of the 3 million had opened and contributed to the tax-favored accounts, other research suggests that it is a small percentage.

An October survey of insured people by the Employee Benefit Research Institute and the Commonwealth Fund found that 1 in 10 people with private insurance had high-deductible plans; of them, 1 in 10 had set up either health savings accounts or health reimbursement accounts, to which only employers may contribute.

The survey also found that those with high-deductible plans were less satisfied with their insurance than those with comprehensive plans and were more likely to delay or avoid healthcare because of costs. But it found that enrollees in high-deductible plans were more aware of healthcare costs than those with comprehensive coverage.