J.P. Farley News and Blog

Consumers Increasing Investments in Health Savings Accounts

Last year saw significant growth in consumer investment in Health Savings Accounts. According to a new Employee Benefit Research Institute report, the number of Health Savings Accounts rose from 5.4 million in 2010 to 8.4 million in 2011, a significant jump. Interest in health savings accounts and qualified high deductible health plans have been growing steadily but slowly since their debut in 2003. In 2006, 1.3 million Americans were invested in health savings accounts. Escalating health care costs have generated increased interest in more effective methods of managing healthcare dollars, spurring rapid growth in health savings accounts in the past few years.

Not only is the number of Health Savings Accounts growing, but so are asset levels. In 2011, health savings account assets totaled $12.4 billion, compared to $7.3 billion in 2010 and just $873.4 million in 2006, according to the Employee Benefit Research Institute report. Better educated about the advantages health savings accounts offer in planning for future healthcare expenses, consumers are investing more money in their health savings accounts. In 2011, the average health savings account balance was $1,470, a 9% increase over 2010 when the average account balance was $1,355 and more than double the $696 average balance in 2006.

Interestingly, the report did not find any definitive correlation between health savings account balances and healthy behavior. For example, smokers had higher balances than non-smokers, but obese people had lower balances than people who were not obese. The report also failed to find a strong connection between health savings account balances and cost-conscious healthcare decision-making; although it did note that cost-conscious consumers had slightly lower account balances. The reasonable conclusion is that investment in health savings accounts is driven by a desire to manage healthcare expenses effectively rather than by anticipated medical expenses or the cost of health care. Continued participant educational efforts and good health plan management upon renewal by health plan sponsors should further promote successful consumer driven health plan programs.