Health savings accounts, touted as a way to lower health-insurance costs and broaden coverage, have fallen short of their promise, according to a report released Wednesday.
The Denver-based Bell Policy Center said the tax-sheltered insurance savings accounts are good for high-income workers but too risky for low-income families.
Health savings accounts, commonly known as HSAs, “may be useful for some consumers, but they are by no means a solution to the major problems in today’s health care system,” said Blair Woodbury, a public-policy fellow at the Bell research center.
The health care program allows individuals to make tax-deductible contributions to savings accounts from which they can pay expenses on high-deductible health-insurance coverage.
Employers sometimes contribute to their employees’ accounts.
Despite the drawbacks outlined by the Bell Policy Center report, HSAs have grown rapidly in Colorado.
Since their creation in 2004, when 1,075 Colorado residents created accounts, the plans had 33,196 enrollees in 2006.
The percentage of Colorado and Wyoming employers offering HSAs as an option in their employee benefit plans has more than doubled in the past year to 15 percent, according to a survey by the Mountain States Employers Council.
HSAs are an effective way to manage health care costs through the use of high-deductible insurance, said Brian Schwartz, a Boulder engineer who has proposed a free-market insurance initiative to a state commission studying health care reforms.
Placing tax-deductible deposits in a health savings account allows individuals to “save money and use it when you really need it,” Schwartz said.
The accounts have been a cornerstone of the Bush administration’s effort to place more of the responsibility for managing health care expenses on individuals by offering tax incentives.
Bush has encouraged use of the plans as a plank in his opposition to congressional Democrats’ efforts to boost spending for children’s health-insurance coverage.
“While HSA plans have grown rapidly in the last few years, they have missed their mark,” Woodbury said in the report, “attracting enrollees with high incomes who are more likely than low-income people to already have coverage.
“Furthermore, the plans do not appear to be making system-wide changes toward lowering costs, as some proponents expected.”
HSAs have “limited usefulness, primarily for high-income taxpayers,” said Ed Kahn, special counsel for the Colorado Center on Law and Policy, an advocacy group for low-income people.
But the high co-pays and high deductibles associated with HSAs discourage low- and moderate-income people from seeking needed health care, he said.
“It’s like tossing a defective life preserver to somebody who is already drowning,” Kahn said.
Staff writer Steve Raabe can be reached at 303-954-1948 or sraabe@denverpost.com.
