The number of health savings accounts, tax-free plans President Bush said could increase healthcare coverage, doubled to more than 1 million in the six months ended in March, an insurer group said Wednesday.
About 37% of those who bought the plans had been without health insurance, said Karen Ignagni, president of America’s Health Plans, a trade group that represents such insurers as Aetna Inc. and PacifiCare Health Systems Inc. About 438,000 people had the plans in September.
Bush wants to use health savings accounts to help reduce the number of uninsured people in the U.S., which is about 45 million. Contributions by employers are exempt from taxes, and workers’ contributions are deductible. Interest earned on the accounts is tax-free, and withdrawals to pay for healthcare are tax-exempt.
The group’s findings show that health savings accounts are “resonating with people who haven’t had these kinds of choices in the past,” Ignagni said.
The accounts were created by the 2003 Medicare Modernization Act, which gave government-funded drug coverage to the elderly. The number of insurance companies enrolling people in the accounts rose to 99 in March from 29 in September, Ignagni said.
More than half of those covered are 40 and older, suggesting that the plans are attractive to all age groups, she said.