David Williams at the Health Business Blog has written a post about Clinton’s plan to cap health insurance premiums at 5% – 10% of a family’s income. With a US median income of nearly $50,000/year, health insurance premiums would be somewhere in the range of $2500 – $5000/year, which as Mr. Williams points out, doesn’t buy a whole lot in our current health insurance system.
Jay and I currently spend about $3200/year on our health insurance premiums. Once we add the baby next month, it will go up to about $4200/year. That’s well within the range that Mrs. Clinton is discussing, but I imagine a lot of people would be very unhappy with the high-deductible HSA-qualified plan that Jay and I have. We’ve had to meet our $3000 deductible already this year to get Jay’s knee fixed, and we had to pay over $1200 last year for a lipoma removal that was excluded as a pre-existing condition on our policy. Until we meet our deductible each year (which we hopefully won’t have to do again for a very long time), our policy does not cover anything except for a small amount of preventive care. Doctor visits, prescriptions, ER visits, etc – we pay for everything until we’ve paid $3000. There’s a trade-off to having low premiums. I imagine that a lot of people who are used to employer-group plans (where the employer typically pays a good chunk of the premiums) that only require a small copay for medical services would be unimpressed with what they could buy for under $5000/year in our current health care system.
Here in Colorado, the median income is a little higher than the national average, at $53,900/year. I’m curious about whether Mrs. Clinton’s plan would take individual income into consideration, or just a national or state average. Would Colorado residents have a higher premium cap than Mississippi residents (where the median income is just $34,343)? It doesn’t seem fair to set the premium cap based on the median income for the whole country, which would place a much bigger strain on residents in lower-income states ($5000/year is almost 15% of the income for an average AK family, but only 7% of the income of an average NJ family).
A plan to cap health insurance premiums at 5 – 10% of household income would only work with a dramatically changed US health care system. We’d have to eliminate the waste and greed factors, and probably remove most of the profit motive in the health insurance industry in order to be able to provide quality health insurance for all Americans, with premiums capped at less than $5000/year per family. I think it can be done, but a premium cap without major changes in the current health care system would only result in reduced benefits and less actual health insurance coverage for the average insured American. Health insurance companies are not giving anything away for free.
