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A groundbreaking new study by the Government Accountability Office (GAO) demonstrates that Health Savings Accounts (HSAs) — tax-favored savings accounts attached to high-deductible health insurance plans established under the 2003 Medicare drug law — are heavily skewed toward affluent individuals.br> It is true that the GAO study did find that 51% of those with HSAs had incomes of $75,000 or more. However, it is also true that nearly 30% had incomes under $50,000 and about 15% had incomes under $30,000, strongly suggesting that HSA policies have appeal to those with lower incomes.
Yet the GAO study doesn’t tell us nearly as much as CBPP and other leftists think. First, the GAO culled its data from IRS returns of 2004, the first year in which HSAs were widely available. What the GAO has captured is probably not the effect of income, but education. People who are better educated often consider themselves well informed and are thus more willing to risk trying a new product. Thus, it is not surprising that the first year that HSAs were available, better-educated people were more likely than the less educated to choose them. The reason the GAO indicated higher income people are flocking to HSAs is that people with more education also tend to have higher incomes. Indeed, Greg Scandlen of Consumers for Health Care Choices rightly faults the GAO for not controlling for the effect of education: “The implication that ‘the wealthy’ are more attracted to HSAs would only apply if wealthier people choose the HSA more frequently than non-wealthy people of the same educational attainment.”
The experience of HSAs will probably mimic that of other new products, with increasing numbers of people of all demographic backgrounds choosing them as time goes on. Data on the first year that HSAs were available only tells us who was likely to adopt HSAs in, well, the first year they were available.
A recent survey of 3,000 health insurance consumers by BlueCross BlueShield that looked at the recent experience of HSA policyholders showed that HSAs are performing quite well. The survey found that the percentage of those with HSA policies reporting either fair or poor health was similar to those in more traditional plans, suggesting that HSAs are not merely for the healthy. It also shows that the lower cost of an HSA policy appeals to the uninsured: 10% of those who chose HSAs were previously uninsured vs. only 3% of those who chose more traditional plans.
It will be several years before we know whether CDHC will ultimately transform our health-care system, but the early evidence is promising. While CDHC has barely gotten out of the starting gate, the left is already claiming that it has lost the race. Too bad the left doesn’t show similar impatience with government-run health-care programs. Perhaps if it did, we’d have a much better health-care system today.
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