If Elected … Clinton Details Premium Cap in Health Plan

Senator Hillary Rodham Clinton said in an interview on Wednesday that if elected president she would push for a universal health care plan that would limit what Americans pay for health insurance to no more than 10 percent of their income, a significant reduction for some families.

In an extensive interview on health policy, Mrs. Clinton said she would like to cap health insurance premiums at 5 percent to 10 percent of income.

The average cost of a family policy bought by an individual in 2006 and 2007 was $5,799, or 10 percent of the median family income of $58,526, according to America’s Health Insurance Plans, a trade group. Some policies cost up to $9,201, or 16 percent of median income.

The average out-of-pocket cost for workers who buy family policies through their employers is lower, $3,281, or 6 percent of median income, according to the Kaiser Family Foundation, a health research group.

A cap on premiums has been part of Mrs. Clinton’s universal coverage proposal since she announced it in September. Her published plan did not disclose her thinking on where to place the cap. Mrs. Clinton, a New York Democrat, set out a comprehensive approach to her signature issue of health care in three speeches last year, but she has been criticized for not providing details on several crucial components. She largely continued that approach in the interview, saying she would leave particulars like the eligibility criteria for her proposed health insurance tax credits to negotiations with Congress.

But she did discuss her thinking on other questions, including the premium cap, and expressed openness to measures she had not previously embraced.

She said, for instance, that it “might be appropriate” to require insurers to spend a heavy proportion of every premium dollar on health care as opposed to overhead and profit. Several governors, including Arnold Schwarzenegger of California and Edward G. Rendell of Pennsylvania, have proposed requiring that insurers spend 85 percent of premiums on health care.

Without specifying a number, Senator Barack Obama, Mrs. Clinton’s rival for the nomination, has backed that general concept.

Mrs. Clinton also she said if she could not generate the money needed to pay for universal coverage through other means, she would not object to raising the excise tax on tobacco products, which Congress last increased in 1997 to 39 cents a pack.

“I’m a big believer in raising tobacco taxes,” Mrs. Clinton said when asked whether an increase should be on the table. “You know, when we were working on the Children’s Health Insurance Program, that’s the funding stream that the Congress came up with, which was bipartisan, which worked out very well. At some point, there’s going to be diminishing returns. As in her debates with Mr. Obama and other contenders, Mrs. Clinton displayed an easy command of health policy in the 45-minute interview, conducted in a basement meeting room in the Midtown Manhattan tower that houses her Senate office. Her voice hoarse, she conceded some weariness from the lengthy campaign, saying her decision to take off the Easter weekend had only allowed exhaustion to set in. Mrs. Clinton presented a confident defense of her call for universal coverage, saying it reflected not only a moral imperative, but also the best chance to reduce costs and improve quality.

“I know that there are a lot of experts who may disagree about how to get to universal health care,” she said. The proposal to cover all 47 million uninsured people would maintain the private insurance system and mandate coverage for all legal residents. She would require insurers to cover every applicant regardless of age or health status. Government insurance similar to Medicare would be available to all consumers.

Refundable tax credits would help make the newly mandatory policies affordable for low- and middle-income workers. Small businesses would receive tax credits to encourage them to offer insurance to employees. Large companies would either have to offer health benefits or pay into a pool that would finance subsidized coverage.

Mrs. Clinton has pegged the cost of her plan at $110 billion. About half would come from savings generated by improvements in prevention, chronic disease management and electronic record keeping. The remainder would be produced by rolling back President Bush’s income tax cuts on people earning more than $250,000 a year.

Mrs. Clinton’s campaign Web site says she would cover the uninsured “with no overall increase in health spending or taxes.” She said in the interview that rolling back the Bush tax cuts “should not be rightly labeled as a tax increase” because without Congressional action the cuts are to expire on Jan. 1, 2011.

Mr. Obama, of Illinois, also aspires to provide universal coverage, but he would mandate coverage only for children. He has said consumers should not be required to buy policies until costs can be reduced enough to make premiums affordable. He has suggested that affordability is the sole reason people do not buy health insurance.

Mrs. Clinton called that argument “just specious.” She maintains, and many health economists agree, that a share of the uninsured are “free riders,” typically young and healthy workers who can afford coverage but choose to spend on other priorities.

She pointed out that millions of qualified Americans, many of them children, remained unenrolled in government programs that would provide free or heavily subsidized policies. As in past interviews and debates, Mrs. Clinton refused to specify how she would enforce her mandate. At some point, it might be necessary to impose penalties to encourage compliance, as is the case in Massachusetts, the lone state with a mandatory coverage plan. As with many elements of her plan, Mrs. Clinton’s ability to lower costs so that premiums would not exceed 10 percent of income is speculative. “I think her plan is realistic at close to 10 percent, but I don’t think it’s realistic at 5 percent,” said Jonathan Gruber, a health economist at the Massachusetts Institute of Technology who generally supports her approach.

Mr. Gruber also questioned not varying the premium cap according to income.

Mrs. Clinton said reducing the cost of health care would be crucial to the next president’s ability to keep Medicare solvent. The program’s trustees projected this week that the Medicare Hospital Insurance Trust Fund would be exhausted in 2019.

She said she would allow Medicare to negotiate lower drug prices and would “rein in” government subsidies for private Medicare Advantage plans. She said she would resist increasing payroll taxes or cutting benefits until trying a broad range of cost controls.

“We have so much unnecessary cost in our system,” Mrs. Clinton said. “So I’m reluctant to put more money into a broken system. It’s our entire health care system — without significant reforms.

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