United States Government Accountability Office

GAO Testimony 

Before the Subcommittee on Health Care, 

Committee on Finance, U.S. Senate

HEALTH SAVINGS 

ACCOUNTS 

Early Enrollee Experiences 

with Accounts and Eligible 

Health Plans 

Statement of John E. Dicken 

Director, Health Care 

For Release on Delivery

Expected at 2:30 p.m. EDT

Tuesday, September 26, 2006

 

GAO-06-1133T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

September 26, 2006

HEALTH SAVINGS ACCOUNTS 

Early Enrollee Experiences with Accounts 

Highlights of GAO-06-1133T, a testimony and Eligible Health Plans 

before the Subcommittee on Health Care, 

Committee on Finance, U.S. Senate 

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. HSAeligible 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 HSAeligible 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. 

HSA-eligible plans had lower premiums, higher deductibles, and higher outof-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.

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. 
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.

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,

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 HSAeligible plan increased from about 438,000 in September 2004 to about 

3 million in January 2006.3

 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.

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 

 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. 

Page 1 GAO-06-1133T 
services. If this occurred, premiums for traditional health insurance plans, 

such as preferred provider organizations (PPO),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.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.7

 The work done for these 

reports was performed from November 2004 through July 2006 in 

accordance with generally accepted government auditing standards. 

 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). 

Page 2 GAO-06-1133T 
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. 

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. 

Background 

• 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

spending8—$5,250 for single coverage and $10,500 for family coverage in 

2006.

9

 Preventive care services may be exempted from the deductible 

requirement, but coverage of most other services, including prescription 

 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. 

Page 3 GAO-06-1133T 
drugs, is subject to the deductible.10 After meeting the deductible, the HSAeligible 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 taxadvantaged savings account established for paying qualified medical 

expenses.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.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.13 Contributions, earned interest, and 

withdrawals for qualified medical expenses are not subject to federal 

income taxation.14 A financial institution, such as a bank or insurance 

company, typically administers the account. 

 10The 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 weightloss 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. 

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

12HSA-eligible plan enrollees are not required to open or contribute to an HSA and can use 

non-HSA funds to pay for medical expenses. 

13The 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. 

14Withdrawals for nonqualified expenses are subject to income tax and, if made before age 

65, a tax penalty. 

Page 4 GAO-06-1133T 
• 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. 

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 2005.15

• 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.16

Financial Features of 

HSA-Eligible Plans 

Differed From Those 

of Traditional Plans, 

but Covered Services 

Were Similar 

• 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.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. 

 15See Kaiser Family Foundation and Health Research and Educational Trust, Employer 

Health Benefits: 2005 Annual Survey (Menlo Park, Calif., and Chicago, Ill.: 2005). 

16Kaiser Family Foundation and Health Research and Educational Trust, Employer Health

Benefits: 2005 Annual Survey. 

17See Mercer Human Resource Consulting, National Survey of Employer-Sponsored

Health Plans: 2005 Survey Report (New York, N.Y.: 2006). 

Page 5 GAO-06-1133T 
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.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.19 If HSA-eligible plan enrollees used taxadvantaged 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 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 $133,000,20 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 65.21 (See fig. 1.) 

 18We 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.

HSA-Eligible Plan 

Enrollees Had Higher 

Incomes than 

Comparison Groups, 

but Data on Age 

Differences Were 

Inconclusive 

19We 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. 

20To 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. 

21All tax filers includes both insured and uninsured individuals. The uninsured tend to have

lower incomes than those with health insurance coverage. 

Page 6 GAO-06-1133T 
Figure 1: Adjusted Gross Income of Tax Filers Reporting HSA Contributions and All 

Tax Filers, 2004 

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. 

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 HSAeligible plan enrollees were older or younger than comparison groups. IRS 

data suggest that the average age of tax filers who reported HSA 

Percentage of tax filers

Source: GAO analysis of IRS data. 

Adjusted gross income (in dollars) 

Tax filers reporting HSA contributions

All tax filers

Under 

 30,000

0 

5 

10 

15 

20 

25 

30 

35 

40 

45 

50 

55 

30,000 

to 49,999

50,000

to 74,999 

75,000 

or more 

Page 7 GAO-06-1133T 
contributions was about 9 years higher than the average age of all tax 

filers under age 65 in 2004.22 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 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.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 

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 

 22All tax filers include both insured and uninsured individuals. The uninsured tend to be

younger than those with health insurance coverage. 

23Kaiser 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.

Page 8 GAO-06-1133T 
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. 

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 

Focus Group 

Participants Were 

Generally Satisfied 

with HSA-Eligible 

Plans, but Would Not 

Recommend Them to 

All Consumers

Page 9 GAO-06-1133T 
sufficient information to allow enrollees to fully assess cost and quality

trade-offs of health care purchasing decisions.24

Most participants reported that they would not recommend HSA-eligible 

plans to all consumers. Some participants said they enrolled in the HSAeligible 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. 

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. 

Concluding 

Observations 

 24Representatives from insurance carriers told us that they were planning to offer 

additional cost and quality data in the coming years. GAO-06-514. 

Page 10 GAO-06-1133T 
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. 

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. 

Contacts and 

Acknowledgments 

(290576) Page 11 GAO-06-1133T 
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Automated answering system: (800) 424-5454 or (202) 512-7470 

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 

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 

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Mail or Phone 

To Report Fraud,

Waste, and Abuse in 

Federal Programs 

Congressional 

Relations 

Public Affairs 

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