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Health Savings Accounts Won't Help Uninsured: Report

Study says the accounts could also destabilize insurance market for small companies

WEDNESDAY, April 20, 2005 (HealthDay News) -- Health Savings Accounts (HSAs), coupled with high-deductible health plans, will result in fewer than 1 million of the 45 million uninsured Americans getting new health coverage, says a report released Wednesday.

The report also concluded that HSAs could destabilize the group health insurance market if small businesses start to offer only high-deductible insurance plans because that's the preference of workers who make higher wages.

Low- and middle-income uninsured people will gain meager or no tax savings from HSAs, said The Effect of Health Savings Accounts on Health Insurance Coverage report.

Currently, about 50 percent of uninsured adults pay no income taxes, the report noted. That means that tax incentives for high-deductible health plans would have little impact on uninsured adults. The report also said that uninsured people in the middle income tax bracket would see potential savings of just 3 percent to 6 percent on a typical high-deductible health plan premium of $2,000.

"Very few people will gain insurance coverage because of tax preferences for Health Savings Accounts, and in fact some people may lose coverage," report co-author Sherry Glied, a professor in the department of health policy and management at Columbia University's Mailman School of Public Health, said in a prepared statement.

"Lower-wage workers in small firms are likely to be most at risk for dropping coverage if they are only offered a plan that provides little protection for out-of-pocket costs," Glied said.

The report said the most likely impact of HSAs would be to encourage people who already have insurance to switch the form of their coverage.

Another report released Wednesday, How High is Too High? Implications of High-Deductible Health Plans, concluded that providing tax incentives for people to buy high-deductible health plans won't increase health care coverage. That's because most uninsured people won't be able to afford high-deductible plans, according to the report, issued by The Commonwealth Fund.

More information

For more on health savings accounts, visit the U.S. Department of the Treasury.

SOURCE: The Commonwealth Fund, news release, April 19, 2005
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