HSAs: Affordability Vehicle or Tax Benefit?

Health savings accounts, which have been touted as a way to make health care more affordable, are becoming more popular all the time.

But they may provide more tax benefits to the wealthy than health benefits to the millions of uninsured looking for affordable medical coverage.

A recent General Accountability Office report found that average adjusted gross income for HSA participants was $139,000 -- more than double that of nonparticipants. Over half of people eligible for HSAs don't participate in them, according to the report.

"This new piece of information confirms our worst fears," says Gail Shearer, director of health-policy analysis at the Consumers Union. These types of medical savings accounts "appeal disproportionately to people who have higher incomes and people who are healthier."

HSAs allow individuals with only qualified catastrophic coverage plans -- plans with high deductibles but relatively low monthly premiums -- to save up to $2,900, tax-free, every year to pay for medical expenses. Funds not used one year roll over into an individual's account the following year.

Proponents argued that HSAs would make health care more accessible by allowing individuals and employers to buy into plans with lower premiums and would discourage people from buying unnecessary medical services.

As of January 2007, more than 4.5 million people had HSAs, according to the research arm of industry group America's Health Insurance Plans. But the number of uninsured continued to swell even as HSAs become more popular: 47 million people were uninsured in 2006, up from 39 million in 2000, according to the most recent Census Bureau figures.