Looking Under Hillary’s Caps

On health care costs, readers need help with the fine print

Hillary Clinton brought a bit of news to the health beat last week, revealing to New York Times reporter Kevin Sack that she thinks individuals and families should pay no more than 5 to 10 percent of their income on health insurance. It’s too bad more media outlets didn’t pounce on the story, and it’s too bad that the Times story itself didn’t do more to illuminate the issue. It’s something people care deeply about once they get past the jargon and understand what you are talking about.

Affordability—how much people should have to pay for health coverage—is a central question in the health reform discussion, and it has gotten short shrift except in California, where the contentious issue tied reform into pretzels before the whole effort collapsed earlier this year. For months in California, stakeholders wrangled over how much people should have to pay, even threatening to walk away from the table if policies were not affordable for their constituents. Before the effort fell through, negotiators agreed that those with incomes between 150 percent and 250 percent of the poverty level (about $31,000 to $52,000) would pay premiums no greater than 5 percent of family income.

The Times story was based on an extensive interview with Clinton about health care, led with the premium cap angle. But it was the kind of opener that would send readers scurrying down the page looking for something they could basically understand and relate to. In the third graph, they learn that, according to the insurance trade association, the average cost of a family policy bought in the individual market is close to $6,000, about 10 percent of family median income, which is $58, 526. But some policies, the Times wrote, “cost up to $9,201.” Yet that number understates reality for many families. When Consumer Reports examined such policies six years ago, it found that family policies could cost as much as $16,000 in some areas. It’s a good bet those premiums are higher now.

By the fourth paragraph, the story really got confusing, trying to make a comparison with what people pay for premiums if they have coverage from their employer. For starters, it misused the term “average out-of-pocket cost” to describe a family’s share of the premium when an employer covers the rest. The term usually means the total of out-of-pocket costs, including the premium, plus deductibles and co-payments. Meanwhile it’s also a good bet that, by that point, readers were lost in the jargon anyway.

Caps can be tricky. What’s affordable to one family might send another to the poor house. Ostensibly asking everyone to pay no more than, say, 10 percent of their income on health insurance seems fair, but 10 percent spent on coverage for a family making $30,000 may cut into spending for necessities like food and gasoline while a family with a $100,000 income may not be hurt so badly by a $10,000 insurance policy. A larger financial cushion softens the blow. The Times story didn’t make that point. Instead it quoted Jonathan Gruber, MIT’s ubiquitous health economist, saying that Clinton’s plan is realistic with close to 10 percent caps, but not with 5 percent caps. But either way: if caps do make it through the legislative sausage grinder, insurers no doubt will respond by crafting cheap policies with skimpy benefits. In the insurance business, under current rules, if policyholders don’t spend very much, they don’t get very much—something neither Clinton nor the Times delved into.

The press gave Clinton a free pass on this one. The Wall Street Journal’s health blog picked up the Times story, but didn’t add analysis or context about caps. Instead the blog returned to the stale subject of mandates and let the world know that Clinton is a “big believer in raising tobacco taxes” to finance her plan, a point she made in the Times interview. The Journal could have better used its space to amplify what caps would mean in the real world, though maybe that’s too hard to do at blog speed. The libertarian Cato Institute, no friend of Clinton’s, weighed in with a crisp sound-bite. Caps, said Cato’s director of health policy studies, are “just a clever way of converting premiums into a progressive income tax. Socialized medicine, here we come.” No doubt that snippet will make the rounds in conservative commentary, and perhaps it will plant itself in the public’s mind that premium caps and affordability equal socialized medicine. Which they do not.

Affordability is too important to ordinary folks for the media to let the issue slide past. Last fall custodians, landscapers, plumbers, and other workers at Georgetown University cheered out loud when their union negotiated a new contract provision that freezes the employees’ share of health insurance premiums for one year. (Premium increases were capped at a little under $28 for the least expensive family plan). About the same time, the Kaiser Family Foundation’s annual Employer Health Benefits Survey announced that workers’ share of premiums had increased significantly from the year before—to about $700 on average for single policies and about $3,300 for family coverage: Not exactly small change for people whose budgets are being squeezed from so many directions.

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman.