A sluggish economy hasn't slowed the nation's health care consumerism movement, according to a recent analysis by the Employee Benefit Research Institute.
Health savings accounts and health reimbursement arrangements covered about 21 million working Americans last year, representing about 12% of the privately insured market. Account holders with the biggest balances tended to be more educated and affluent, but they also were typically healthier, older and male.
The 2010 EBRI/MGA Consumer Engagement in Health Care Survey found a slight increase in total assets rolled over to these accounts, to $4.2 billion last year from $4 billion in 2009. Since 2004, HSAs have enabled employees to pay for health care expenses on a pretax basis and roll over unused money from one year to the next, while HRAs consisting of employer contributions only were created in 2001 to finance medical expenses below a high-deductible threshold.
Paul Fronstin, director of EBRI's health research program, noted that "the market continues to grow," describing the $4.2 billion in rolled-over funds as "a lot of money in a short period of time."
The average rollover amount, however, fell slightly to $1,029 last year from $1,295 in 2009 and $592 in 2006, while average account balances decreased to $1,355 in 2010, from $1,419 and $1,356 within the previous two years. Account balances had soared before the recession to $1,320 on average in 2007, from $696 the previous year.
In 2010, there was $7.7 billion in HSAs and HRAs spread across 5.7 million accounts, compared with $7.1 billion in assets held in 5 million accounts in 2009.
Account holders who are saving the most money tend to be well-off. For example, balances averaged $1,224 for individuals earing $100,000 or more, compared with $860 for those with between $50,000 and $99,999 in household income and $766 for those earning less than $50,000. Also, those with the highest average rollovers tend to be better educated. For example, individuals with a graduate degree had an average rollover of $999, compared with $1,034 for those with a college degree and $799 for those with a high school degree or less.
Higher rollovers for more educated account holders "raises a question as to whether people with low education will ever be able to amass a significant amount of money in the accounts," says Fronstin.
Roger M. Travis, president of ExperienceLab Inc., which helps employers make the transition from traditional health plans to consumer-directed coverage, says "the fact that total rollover was higher at the end of 2010, but that average rollover was lower, reflects a combination of factors."
One is that the sluggish economy reduces the amount that working Americans can save while trying to make ends meet. Another is strong growth in the number of plans reflects a movement toward adoption of high-deductible health plans. Perhaps more significant is the fact that there are any rollovers in this economic climate means CDHPs are working as they were intended.
The findings suggest that "this approach to health care will own the preponderant market share of employer offerings and individual choice," says Travis.
Bruce Shutan, former EBN managing editor, is a freelance writer in Los Angeles.
