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Testimony: 

Before the Subcommittee on Health Care, Committee on Finance, U.S. 
Senate: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 2:30 p.m. EDT: 

Tuesday, September 26, 2006: 

Health Savings Accounts: 

Early Enrollee Experiences with Accounts and Eligible Health Plans: 

Statement of John E. Dicken: 

Director, Health Care: 

GAO-06-1133T: 

GAO Highlights: 

Highlights of GAO-06-1133T, a testimony before the Subcommittee on 
Health Care, Committee on Finance, U.S. Senate 

Why GAO Did This Study: 

Health savings accounts (HSA) and the high-deductible health insurance 
plans that are eligible to be coupled with them are a new type of 
consumer-directed health plan attracting interest among employers and 
consumers. HSA-eligible plans constitute a small but growing share of 
the private insurance market, and the novel structure of the plans has 
raised questions about how they could affect enrollees’ health care 
purchasing decisions and costs. 

This statement is based on GAO’s August 2006 report entitled Consumer-
Directed Health Plans: Early Enrollee Experiences with Health Savings 
Accounts and Eligible Health Plans (GAO-06-798). In this report, GAO 
reviewed (1) the financial features of HSA-eligible plans in comparison 
with those of traditional plans, such as preferred provider 
organizations (PPO); (2) the characteristics of HSA-eligible plan 
enrollees in comparison with those of traditional plan enrollees or 
others; (3) HSA funding and use; and (4) enrollees’ experiences with 
HSA-eligible plans. 

What GAO Found: 

HSA-eligible plans had lower premiums, higher deductibles, and higher 
out-of-pocket spending limits than did traditional plans in 2005, but 
both plan types covered similar services, including preventive 
services. For the three employers’ health plans GAO reviewed to 
illustrate enrollees’ potential health care costs, GAO estimated that 
HSA-eligible plan enrollees would incur higher annual costs than PPO 
enrollees for extensive use of health care, but would incur lower 
annual costs than PPO enrollees for low to moderate use of health care. 

HSA-eligible plan enrollees generally had higher incomes than 
comparison groups, but data on age differences were inconclusive. In 
2004, 51 percent of tax filers reporting an HSA contribution had an 
adjusted gross income of $75,000 or more, compared with 18 percent of 
all tax filers under 65 years old. Two of the three employers GAO 
reviewed, the Federal Employees Health Benefits Program, and a national 
broker of health insurance also reported that HSA-eligible plan 
enrollees had higher incomes than traditional plan enrollees in 2005. 

Just over half of all HSA-eligible plan enrollees and most employers 
contributed to HSAs, and account holders used their HSA funds to pay 
for medical care and accumulate savings. About 55 percent of HSA-
eligible plan enrollees reported HSA contributions to the Internal 
Revenue Service in 2004, and about two-thirds of employers offering HSA-
eligible plans contributed to their employees’ HSAs. About 45 percent 
of tax filers reporting 2004 HSA contributions also reported that they 
withdrew funds in that year, and 90 percent of these funds were 
withdrawn for qualified medical expenses. The other 55 percent of those 
reporting HSA contributions did not withdraw any funds from their HSA 
in 2004. 

HSA-eligible plan enrollees who participated in GAO’s focus groups 
generally reported positive experiences, but most would not recommend 
the plans to all consumers. Few participants reported researching cost 
before obtaining health care services, although many researched the 
cost of prescription drugs. Most participants were satisfied with their 
HSA-eligible plans and would recommend them to healthy consumers, but 
not to those who use maintenance medication, have a chronic condition, 
have children, or may not have the funds to meet the high deductible. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-1133T. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact John E. Dicken at (202) 
512-7119 or dickenj@gao.gov. 

[End of Section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss the findings from our August 
2006 report entitled Consumer-Directed Health Plans: Early Enrollee 
Experiences with Health Savings Accounts and Eligible Health 
Plans.[Footnote 1] In this report, we examined enrollees' experiences 
with health savings accounts (HSA) and the high-deductible health 
insurance plans that are eligible to be coupled with them. Since tax- 
advantaged HSAs were made available in 2004,[Footnote 2] this new type 
of consumer-directed health plan has been attracting interest among 
employers and enrollees. HSA-eligible plans now constitute a small but 
growing share of the private health insurance market. The number of 
enrollees and dependents covered by an HSA-eligible plan increased from 
about 438,000 in September 2004 to about 3 million in January 
2006.[Footnote 3] Both employers and plan enrollees may contribute to 
tax-advantaged HSAs, and enrollees can use the accounts to pay for 
their health care expenses. The high-deductible health plans typically 
have lower premiums than other types of health plans because high- 
deductible health plan enrollees bear a greater share of the initial 
costs of care.[Footnote 4] 

The novel structure of HSA-eligible plans has raised questions 
regarding how the plans and HSAs will affect enrollees' health care 
purchasing decisions and costs. Proponents of HSA-eligible plans 
believe that the high deductibles will encourage enrollees to become 
more astute health care consumers and thus restrain health care 
spending increases. However, some critics contend that the plans may 
attract a disproportionate share of wealthier enrollees who seek to use 
the HSA as a tax-advantaged savings vehicle, or healthier or younger 
individuals who use fewer health care services. If this occurred, 
premiums for traditional health insurance plans, such as preferred 
provider organizations (PPO),[Footnote 5] could rise faster than they 
otherwise would because of the disproportionate share of enrollees with 
higher health care expenses remaining in those plans. 

My remarks today will focus on (1) the financial features of HSA- 
eligible plans in comparison with those of traditional plans, (2) the 
characteristics of HSA-eligible plan enrollees in comparison with those 
of traditional plan enrollees or others, (3) HSA funding and use, and 
(4) enrollees' experiences with HSA-eligible plans. These remarks are 
based on information contained in our August 2006 report. 

In conducting our work, we analyzed data regarding HSA-eligible and 
traditional plans and enrollees from two national employer health 
benefits surveys; three selected large employers; and eHealthInsurance, 
a large, national broker of individual and small business health 
insurance.[Footnote 6] To illustrate the potential health care costs 
faced by HSA-eligible and traditional plan enrollees, we estimated the 
total annual costs incurred by enrollees of the three employers' 2005 
HSA-eligible and PPO plans, considering different levels of health care 
utilization. We compared Internal Revenue Service (IRS) data for tax 
filers reporting HSA contributions with corresponding data for all tax 
filers under 65 years old. We also conducted focus groups with 
employees of the three employers. A detailed explanation of our scope 
and methodology is included in the report's appendix I. This report is 
the most recent of several related reports GAO has issued within the 
last year.[Footnote 7] The work done for these reports was performed 
from November 2004 through July 2006 in accordance with generally 
accepted government auditing standards. 

In summary, we found that HSA-eligible plans had lower premiums, higher 
deductibles, and higher out-of-pocket spending limits than did 
traditional plans in 2005, but both plan types covered similar 
services, including preventive services. Our illustration of enrollees' 
potential health care costs for the three employers' 2005 health plans 
we reviewed showed that HSA-eligible plan enrollees would incur higher 
annual costs than PPO plan enrollees for extensive amounts of health 
care, but would incur lower annual costs than PPO enrollees for low to 
moderate use of health care. HSA-eligible plan enrollees generally had 
higher incomes than comparison groups, but data on age differences were 
inconclusive. Just over half of all HSA-eligible plan enrollees and 
most employers contributed to HSAs. About 45 percent of tax filers 
reporting 2004 HSA contributions also reported that they withdrew funds 
in 2004, and 90 percent of withdrawn funds were used for qualified 
medical expenses. HSA-eligible plan enrollees who participated in our 
focus groups generally reported positive experiences, but most would 
not recommend the plans to all consumers. Most participants said they 
would recommend the plans to healthy consumers, but not to those who 
use maintenance medications, have a chronic condition, have children, 
or may not have the funds to meet the high deductible. 

Background: 

Consumer-directed health plans generally include three components: a 
health plan with a high deductible, a savings account--such as an HSA-
-to pay for health care expenses, and enrollee decision-support tools. 

* An insurance plan with a high-deductible. HSA-eligible plans are 
required to meet certain statutory criteria. The plans must have a 
minimum deductible amount--$1,050 for single coverage and $2,100 for 
family coverage in 2006--and a maximum limit on enrollee out-of-pocket 
spending[Footnote 8]--$5,250 for single coverage and $10,500 for family 
coverage in 2006.[Footnote 9] Preventive care services may be exempted 
from the deductible requirement, but coverage of most other services, 
including prescription drugs, is subject to the deductible.[Footnote 
10] After meeting the deductible, the HSA-eligible plan pays for most 
of the cost of covered services until the enrollee meets the out-of- 
pocket spending limit, at which point the plan pays 100 percent of the 
cost of covered services. 

* A savings account to pay for health care expenses. There are several 
types of savings accounts that may be associated with consumer-directed 
health plans, with HSAs being among the most prominent. An HSA is a tax-
advantaged savings account established for paying qualified medical 
expenses.[Footnote 11] Individuals are eligible to open an HSA if they 
are enrolled in an HSA-eligible plan and have no other health coverage, 
with limited exceptions.[Footnote 12] HSAs are owned by the account 
holder, and the accounts are portable--individuals may keep their 
accounts if they switch jobs or enroll in a non-HSA-eligible health 
plan. Both employers and individuals may contribute to HSAs, and 
individuals may claim a deduction on their federal income taxes for 
their HSA contributions. HSA balances can earn interest; roll over from 
year to year; and be invested in a variety of financial instruments, 
such as mutual funds. HSA-eligible plan enrollees who choose to pay for 
medical expenses from their HSA may access their account funds by 
check, by debit card, or by authorizing insurance carriers to allow 
providers to directly debit their account funds. HSAs are subject to 
annual contribution limits. In 2006, contributions were limited to 100 
percent of the deductible, but not more than $2,700 for single coverage 
or $5,450 for family coverage.[Footnote 13] Contributions, earned 
interest, and withdrawals for qualified medical expenses are not 
subject to federal income taxation.[Footnote 14] A financial 
institution, such as a bank or insurance company, typically administers 
the account. 

* Decision-support tools. HSA-eligible plans typically provide enrollee 
decision-support tools that include, to some extent, information on the 
cost of health care services and the quality of health care providers. 
Experts suggest that reliable information about the cost of particular 
health care services and the quality of specific health care providers 
would help enrollees become more actively engaged in making health care 
purchasing decisions. These tools may be provided by health insurance 
carriers to all health insurance plan enrollees, but are likely to be 
more important to enrollees of HSA-eligible plans who have a greater 
financial incentive to make informed decisions about the quality and 
costs of health care providers and services. 

Financial Features of HSA-Eligible Plans Differed From Those of 
Traditional Plans, but Covered Services Were Similar: 

HSA-eligible plans had lower premiums, higher deductibles, and higher 
out-of-pocket spending limits than traditional plans in 2005. 
Specifically, data from national employer health benefits surveys 
regarding plans offered in the group market indicate: 

* Premiums for HSA-eligible plans averaged 35 percent less than 
employers' traditional plan premiums for single coverage and 29 percent 
less for family coverage in 2005.[Footnote 15] 

* Annual deductibles for HSA-eligible plans averaged $1,901 for single 
coverage and $4,070 for family coverage in 2005--nearly six times 
greater than those of employers' traditional plans.[Footnote 16] 

* The median annual out-of-pocket spending limit for HSA-eligible plans 
offered by large employers was $3,500 for single coverage in 2005, 
which was higher than the median out-of-pocket spending limit of $1,960 
reported for traditional plans.[Footnote 17] 

The HSA-eligible and traditional plans we reviewed covered the same 
broad categories of services, including preventive services, and also 
used similar provider networks in 2005. 

Our illustration of enrollees' potential health care costs--including 
premiums, deductibles, and other out-of-pocket costs for covered 
services--for the three employers' 2005 health plans we reviewed showed 
that HSA-eligible plan enrollees would incur higher annual costs than 
PPO enrollees for extensive use of health care, but would incur lower 
annual costs than PPO enrollees for low to moderate use of health 
care.[Footnote 18] Specifically, we estimated that in the event of an 
illness or injury resulting in a hospitalization costing $20,000, the 
total costs incurred by the three employers' HSA-eligible plan 
enrollees would be 47 to 83 percent higher than those faced by the 
employers' PPO enrollees. In contrast, we estimated that the total 
costs paid by HSA-eligible plan enrollees who used low to moderate 
amounts of health care, visiting the doctor for illnesses or injuries 
six times in one year, would be 48 to 58 percent lower than the costs 
paid by the PPO enrollees.[Footnote 19] If HSA-eligible plan enrollees 
used tax-advantaged funds that they, or someone other than their 
employer, contributed to their HSA, their costs could have been lower 
than our estimates. 

HSA-Eligible Plan Enrollees Had Higher Incomes than Comparison Groups, 
but Data on Age Differences Were Inconclusive: 

HSA-eligible plan enrollees generally had higher incomes than 
comparison groups. The average adjusted gross income of the estimated 
108,000 tax filers reporting HSA contributions in 2004 was about 
$133,000,[Footnote 20] compared with $51,000 for all tax filers under 
age 65, according to IRS data. Moreover, 51 percent of tax filers 
reporting HSA contributions had an adjusted gross income of $75,000 or 
more, compared with 18 percent of all tax filers under age 65.[Footnote 
21] (See fig. 1.) 

Figure 1: Adjusted Gross Income of Tax Filers Reporting HSA 
Contributions and All Tax Filers, 2004: 

[See PDF for image] 

Source: GAO analysis of IRS data. 

Notes: Data are based on a sample of 2004 tax returns processed by IRS. 
For the all tax filers category, we excluded those 65 years and older 
because they are generally enrolled in Medicare and are ineligible to 
contribute to an HSA. 

[End of figure] 

We also found similar income differences between HSA-eligible plan and 
traditional plan enrollees when we examined other data sources from the 
group and individual markets. Among Federal Employees Health Benefits 
Program (FEHBP) enrollees actively employed by the federal government, 
43 percent of HSA-eligible plan enrollees earned federal incomes of 
$75,000 or more, compared with 23 percent for all enrollees in 2005. 
Additionally, two of the three employers we reviewed and 
eHealthInsurance reported that HSA-eligible plan enrollees had higher 
incomes than did traditional plan enrollees in 2005. 

The data sources we examined did not conclusively indicate whether HSA- 
eligible plan enrollees were older or younger than comparison groups. 
IRS data suggest that the average age of tax filers who reported HSA 
contributions was about 9 years higher than the average age of all tax 
filers under age 65 in 2004.[Footnote 22] Similarly, eHealthInsurance 
reported that in the individual market the average age of its HSA- 
eligible plan enrollees was 5 years higher than that of its traditional 
plan enrollees in 2005. In contrast, data from FEHBP and the three 
employers we reviewed indicate that the average age of HSA-eligible 
plan enrollees, excluding retirees, was 2 to 6 years lower than that of 
comparison groups of enrollees. 

Just Over Half of Enrollees and Most Employers Contributed to HSAs, and 
These Funds Were Used to Pay for Medical Care and to Accumulate 
Savings: 

Just over half of HSA-eligible plan enrollees and most employers 
contributed to HSAs. About 55 percent of HSA-eligible plan enrollees 
reported HSA contributions in 2004, according to our analysis of data 
obtained from IRS and a publicly available survey. HSA-eligible plan 
enrollees from the employers we reviewed were more likely to contribute 
to an HSA when their employer also offered account contributions. Among 
tax filers who claimed a deduction for an HSA in 2004, the average 
deduction was about $2,100 and the average amount deducted increased 
with income. About two-thirds of employers offering HSA-eligible plans 
contributed to their employees' HSAs in 2005, according to two national 
employer health benefits surveys.[Footnote 23] In 2004, the average 
employer HSA contribution reported to IRS was about $1,064. 

Account holders used HSA funds to pay for medical care and to 
accumulate savings. About 45 percent of tax filers reporting an HSA 
contribution in 2004--made by themselves, their employers, or others on 
their behalf--also reported withdrawing funds in 2004. The average 
annual amount withdrawn by these tax filers was about $1,910. About 90 
percent of these withdrawn funds were used to pay for expenses 
identified under the Internal Revenue Code as eligible medical 
expenses. IRS data show that about 40 percent of all funds contributed 
to HSAs in 2004 were withdrawn from the accounts by the end of the 
year. In addition to using HSAs for medical and other expenses, account 
holders appeared to use their HSA as a savings vehicle. About 55 
percent of tax filers reporting HSA contributions in 2004 withdrew no 
money from their account in 2004. We could not determine whether HSA- 
eligible plan enrollees accumulated balances because they did not need 
to use their accounts (that is, they paid for care from out-of-pocket 
sources or did not need health care during the year) or because they 
reduced their health care spending as a result of financial incentives 
associated with the HSA-eligible plan and HSA. However, many focus 
group participants reported using their HSA as a tax-advantaged savings 
vehicle, accumulating HSA funds for future use. 

Focus Group Participants Were Generally Satisfied with HSA-Eligible 
Plans, but Would Not Recommend Them to All Consumers: 

HSA-eligible plan enrollees who participated in our focus groups at the 
three employers we reviewed generally reported positive experiences 
with their plans. These focus group participants, who had voluntarily 
elected to enroll in HSA-eligible plans as one of several choices 
offered by their employers, cited the ability to accumulate savings, 
the tax advantages of having an HSA, and the ability to use an HSA 
debit card as positive aspects of HSAs. Participants reported few 
problems obtaining care, and when given a choice, many reported that 
they had reenrolled in the HSA-eligible plan. 

While focus group participants enrolled in HSA-eligible plans generally 
understood the key attributes of their plan, such as low premiums, high 
deductibles, and the mechanics of using the HSA, they were confused 
about certain other features. For example, many participants understood 
that certain preventive services were covered free of charge, but they 
also had trouble distinguishing between the preventive services and 
other services provided during a preventive office visit. Moreover, 
many participants were unsure what medical expenses qualified for 
payment using their HSA. 

Few participants researched the cost of hospital or physician services 
before obtaining care, although many participants researched the cost 
of prescription drugs. A few participants reported asking physicians 
about the cost of services, but others expressed discomfort with asking 
physicians about cost. For example, one participant said, "Americans 
don't negotiate. It's not polite to question the value of [a 
provider's] work." Participants of one focus group also reported not 
initially understanding the extent to which they needed to manage and 
take responsibility for their health care, including by asking 
questions about the cost of services and medications. Participants also 
reported that only limited information was available regarding key 
quality measures for hospitals and physicians, such as the volume of 
procedures performed and the outcomes of those procedures. The decision-
support tools provided with consumer-directed health plans we 
previously reviewed were limited and did not provide sufficient 
information to allow enrollees to fully assess cost and quality trade- 
offs of health care purchasing decisions.[Footnote 24] 

Most participants reported that they would not recommend HSA-eligible 
plans to all consumers. Some participants said they enrolled in the HSA-
eligible plan specifically because they did not anticipate getting 
sick, and many said they considered themselves and their families as 
being fairly healthy. Most participants would recommend the plans to 
healthy consumers, but not to those who use maintenance medication, 
have a chronic condition, have children, or may not have the funds to 
meet the high deductible. 

Concluding Observations: 

In closing, as more individuals face the choice of enrolling in HSA- 
eligible plans or other consumer-directed health plans, they will 
likely weigh the savings potential and financial risks associated with 
these plans in relation to their own health care needs and financial 
circumstances. Because healthier individuals who use little health care 
could incur lower costs under HSA-eligible plans than under traditional 
plans, when given a choice they may be more likely to select an HSA- 
eligible plan than will less healthy individuals who use greater 
amounts of health care. It will be important to monitor enrollment 
trends and assess their implications for the cost of health care 
coverage for all HSA-eligible and traditional plan enrollees. 

Few of the HSA-eligible plan enrollees who participated in our focus 
groups researched cost before obtaining health care services. This may 
be due in part to a reluctance of consumers to question health care 
providers about the cost of their services and the dearth of 
information provided by insurance carriers to their enrollees about the 
cost of health care services under their plans--a limitation that 
insurance carriers are beginning to address. According to proponents, 
an increase in such health care consumerism can help restrain health 
care spending increases under the plans. Such an increase will likely 
require time, education, and improved decision-support tools that 
provide enrollees with more information about the cost and quality of 
health care providers and services. 

Finally, while HSA-eligible plan enrollees we spoke with were generally 
satisfied with their plans, it is notable that these enrollees each had 
a choice of health plans and voluntarily selected the HSA-eligible 
plan. Their caution that HSA-eligible plans may not be appropriate for 
everyone suggests that satisfaction may be lower when employees are not 
given a choice or when employer contributions to premiums or accounts 
do not sufficiently offset the potentially greater costs faced by HSA- 
eligible plan enrollees. 

Mr. Chairman, this concludes my prepared remarks. I would be happy to 
answer any questions that you or other Members of the Subcommittee may 
have. 

Contacts and Acknowledgments: 

For future contacts regarding this testimony, please contact John E. 
Dicken at (202) 512-7119 or at dickenj@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this testimony. Randy DiRosa, Assistant Director; 
Pamela N. Roberto; and Patricia Roy made key contributions to this 
statement. 

FOOTNOTES 

[1] GAO-06-798 (Washington, D.C.: Aug. 9, 2006). 

[2] Tax advantages for HSAs were authorized by the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 for 
individuals covered by high-deductible health insurance plans that meet 
certain criteria. Pub. L. No. 108-173, § 1201, 117 Stat. 2066, 2469. 

[3] In 2004 and 2005, more than half of these enrollees and dependents 
were covered by an HSA-eligible plan purchased from an insurance 
carrier in the individual insurance market, rather than obtained from 
an employer. However, preliminary data for 2006 suggest that the number 
of HSA-eligible plan enrollees in the group market, which includes 
health plans offered by employers to employees, is growing faster than 
in the individual market. 

[4] Most employers subsidize a share of employees' health coverage 
purchased in the group market, whereas individuals purchasing coverage 
in the individual market typically pay the full cost. 

[5] PPO plans generally allow enrollees to select their own health care 
providers and reimburse either the provider or the enrollee for the 
cost of covered services. Enrollees' costs are generally lower if they 
obtain care from the plan's network of preferred providers. For the 
purposes of this report, unless noted otherwise, traditional plans 
refers to PPO plans. 

[6] Data we report on traditional plans offered through 
eHealthInsurance include both PPO plans and other major medical plans 
that do not meet the federal criteria for HSA-eligible plans. 

[7] See GAO, Federal Employees Health Benefits Program: Early 
Experience with a Consumer-Directed Health Plan, GAO-06-143 
(Washington, D.C.: Nov. 21, 2005); Federal Employees Health Benefits 
Program: First-Year Experience with High-Deductible Health Plans and 
Health Savings Accounts, GAO-06-271 (Washington, D.C.: Jan. 31, 2006); 
and Consumer-Directed Health Plans: Small but Growing Enrollment Fueled 
by Rising Cost of Health Care Coverage, GAO-06-514 (Washington, D.C.: 
Apr. 28, 2006). 

[8] An out-of-pocket spending limit represents the maximum amount an 
enrollee is required to pay toward the cost of covered services. The 
out-of-pocket spending limit includes deductibles and other payments, 
but does not include premiums. 

[9] These amounts are annually adjusted for cost-of-living increases. 
In 2005, the minimum deductible amount was $1,000 for single coverage 
and $2,000 for family coverage, and the maximum limit on enrollee out- 
of-pocket spending was $5,100 for single coverage and $10,200 for 
family coverage. 

[10] The IRS definition of preventive care includes periodic health 
evaluations, including tests and diagnostic procedures ordered in 
connection with routine examinations, routine prenatal and well-child 
care, immunizations, tobacco cessation programs, obesity weight-loss 
programs, and various screening services. Through 2006, IRS allows 
certain plans to be treated as HSA eligible, where, in order to comply 
with state requirements, the plans cover certain services (such as 
prescription drugs) before enrollees meet the deductible. After 2006, 
no such transitional relief will be available. 

[11] Qualified medical expenses are identified under the Internal 
Revenue Code. 

[12] HSA-eligible plan enrollees are not required to open or contribute 
to an HSA and can use non-HSA funds to pay for medical expenses. 

[13] The annual contribution limit is adjusted annually for cost-of- 
living increases. In 2005, contributions were allowed up to 100 percent 
of the deductible, but not more than $2,650 for single or $5,250 for 
family coverage. 

[14] Withdrawals for nonqualified expenses are subject to income tax 
and, if made before age 65, a tax penalty. 

[15] See Kaiser Family Foundation and Health Research and Educational 
Trust, Employer Health Benefits: 2005 Annual Survey (Menlo Park, 
Calif., and Chicago, Ill.: 2005). 

[16] Kaiser Family Foundation and Health Research and Educational 
Trust, Employer Health Benefits: 2005 Annual Survey. 

[17] See Mercer Human Resource Consulting, National Survey of Employer- 
Sponsored Health Plans: 2005 Survey Report (New York, N.Y.: 2006). 

[18] We assumed that enrollees had single coverage and used in-network 
services. We also assumed that enrollees used the funds their employers 
contributed to their HSA in 2005 and paid for the rest out of pocket. 
We assumed that enrollees did not have HSA funds carried over from a 
prior year, which, if used, could have lowered enrollees' out-of-pocket 
costs. We considered only the costs associated with medical care 
provided by a physician and did not consider any other costs that could 
be incurred by an enrollee, such as prescription drug costs. 

[19] We assumed that the negotiated rate for each doctor's visit was 
$80. We developed this assumption based on our analysis of one 
insurance carrier's negotiated rates for office visits for low to 
moderate problems in the regions the three employers' plans were 
offered. 

[20] To receive a deduction, tax filers must report HSA contributions 
to IRS. Those reporting HSA contributions in 2004 represented about 0.1 
percent of the 115 million tax filers less than 65 years of age. 

[21] All tax filers includes both insured and uninsured individuals. 
The uninsured tend to have lower incomes than those with health 
insurance coverage. 

[22] All tax filers include both insured and uninsured individuals. The 
uninsured tend to be younger than those with health insurance coverage. 

[23] Kaiser Family Foundation and Health Research and Educational 
Trust, Employer Health Benefits: 2005 Annual Survey; and Mercer Human 
Resource Consulting, National Survey of Employer-Sponsored Health 
Plans: 2005 Survey Report. 

[24] Representatives from insurance carriers told us that they were 
planning to offer additional cost and quality data in the coming years. 
GAO-06-514. 

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Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 U.S. 
Government Accountability Office, 441 G Street NW, Room 7125 
Washington, D.C. 20548: 

Public Affairs: 

Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800 
U.S. Government Accountability Office, 441 G Street NW, Room 7149 
Washington, D.C. 20548: