SOTU: Health Savings Accounts Offer Americans No Meaningful Savings

Bush said: “The Congress must also expand health savings accounts.”

FACT — HSAs MAY INCREASE THE NUMBER OF UNINSURED: “While 3.8 million previously uninsured people would gain health coverage through HSAs as a result of the Administration’s proposals, 4.4 million people would become uninsured because their employers would respond to the new tax breaks by dropping coverage and they would not secure coverage on their own. The net effect would be to increase the number of uninsured Americans by 600,000 despite spending more than $10 billion annually.” [CBPP, 4/5/06]

FACT — HSAs DO NOT OFFER MEANINGFUL SAVINGS FOR AMERICANS: “Low- and middle-income uninsured people will gain meager or no tax savings” from health savings accounts, according to a Commonwealth Fund study. Roughly 50 percent of uninsured adults pay no federal income taxes, meaning that “tax incentives for high-deductible health plans would have little impact on uninsured adults.” [Commonwealth Fund, 4/05FACT — HSAs PRIMARILY BENEFIT THE RICH: The Government Accountability Office (GAO) found “that the average income of HSA users was $133,000 in 2004, compared to $51,000 for all non-elderly tax filers.” Most low-income individuals “do not face high enough tax liability to benefit in a significant way from tax deductions associated with HSAs.” [CBPP, 12/7/06; Kaiser Familiy Foundation, 10/4/06]

FACT — HSAs WILL NOT DECREASE THE NUMBER OF UNINSURED: HSAs are “not likely to be an important contributor to expanding coverage among uninsured people” because most of uninsured Americans “do not face high-enough marginal tax rates to benefit substantially from the tax deductibility of HSA contributions.” [Commonwealth Fund, 4/05]


FACT — AMERICANS ARE DISSATISFIED WITH HSAs: Just 33–42 percent of enrollees in consumer-driven health plans were satisfied with their health care, compared to 63 percent of those people with traditional coverage. Two-thirds of people prefer an employer-selected set of plans over an employer-funded account and choosing insurance on their own. [Commonwealth Fund, 12/05]