Clinton Details Premium Cap in Health Plan

During the class discussion on the health care policy positions of presidential candidates, we saw that affordability of health coverage is a central qusetion in health care reform. All three candidates - Clinton, Obama and McCain - came up with measures that would reduce the cost of health care, including tax credits to purchase insurance, government subsidies for low-income households and safe re-importation of drugs from Canada.

According to the article "Clinton Details Premium Cap in Health Plan" in New York Times, Hillary Clinton proposed that individuals and families should pay no more than 5 to 10 percent of their income on health insurance. This proposal for "premium cap" definitely makes Clinton's universal health care plan seem more reasonable; she is going to control the cost before making everyone purchase health insurance.

However, this proposal raises some questions. The article states that the average cost of a family policy bought by an individual was $58,526 in 2006 and 2007, or 10 percent of the median family income of $58,526, although some policies cost up to $9,201. If Clinton sets the cap at around 10 percent of income for everyone, how would this affect the median family that is typical of the American household, if it is already suffering from high cost? Also, Clinton prefers to set the limit at a single level for all Americans rather than varying it by income. Although it might seem fair, lower-income families will have harder time paying 10percent of their income on health insurance than more affluent families do. This problem may be alleviated if government subsidies work well enough to cover the insurance costs for lower-income families.

The article also quotes Jonathan Gruber, a health economist at the Massachusetts Institute of Technology, in speculating that Clinton's plan is realistic at close to 10 percent, but not at 5 percent. While Clinton talks about covering all 47 million uninsured people and requiring insurers to cover every applicant regardless of age or health status, insurers might respond to the cap by crafting cheap policies with less benefits. Clinton does not address the issue of controlling and maintaining the insurance quality.