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Hillary Clinton's plan to rein in out-of-pocket health costs, explained

Democratic presidential candidate Hillary Rodham Clinton applauses a speaker at the Congressional Black Caucus Foundations 45th Annual Legislative Conference Phoenix Awards Dinner at the Walter E. Washington Convention Center on September 19, 2015.
Democratic presidential candidate Hillary Rodham Clinton applauses a speaker at the Congressional Black Caucus Foundations 45th Annual Legislative Conference Phoenix Awards Dinner at the Walter E. Washington Convention Center on September 19, 2015.
Aude Guerrucci (pool/Getty Images)

Hillary Clinton has unveiled a new plan to reduce out-of-pocket health-care costs for families. Specifically, she would exempt three sick visits a year from insurance deductibles and create a tax break for people who pay more than 5 percent of their income on care not covered by insurance, her campaign said Wednesday.

The proposal comes on the heels of an eye-popping Kaiser Family Foundation report showing that deductible costs have grown at nearly seven times the rate of workers' earnings since 2010. As Vox's Sarah Kliff wrote, the finding explains why so many Americans feel like their health-care costs are going up even when the growth of overall health spending has slowed under Obamacare.

And the plan comes a day after Clinton released a proposal she says would curb out-of-pocket drug costs for consumers, which played into public outrage over the maker of Daraprim raising the per-pill price of the AIDS medication from $13.50 to $750 (a price the company now says it will reduce).

By contrast, Clinton's main primary rival, Vermont Sen. Bernie Sanders, has already unveiled his own plan to lower drug costs for consumers and backs a single-payer system that would effectively be able to set health-care prices for the whole country.

The main features of Clinton's plan

Clinton would attack out-of-pocket costs from two ends: preventing patients from paying for up to three visits to the doctor in the first place, and refunding money to individuals and families that spend an inordinate share of their income on health services not covered by their insurance.

Clinton's campaign says she would require "insurers and employers" to pay for as many as three sick visits a year, even if patients haven't yet met their deductible. Officials estimate that would save as much as $100 per year for an individual with private health insurance.

Her proposal also includes a new "refundable" tax credit of up to $2,500 for an individual and $5,000 for a family to offset expenses for folks who pay more than 5 percent of their income in a year to out-of-pocket health-care costs. Refundable means that the credit can be paid through tax refunds even if an individual or family's overall tax bill is below $0. It would only apply to people who have health insurance, and the Clinton campaign says it would be paid for by requiring drug companies to pay rebates and by raising taxes on the wealthy. Since it would require new legislation, and the GOP is expected to hold the House in 2016, it's a long shot.

The Clinton campaign also said she would try to create new transparency mechanisms to prevent sticker shock for patients who were unaware that they were due to receive costly medical bills, provide a fallback plan to states to limit insurance premium hikes, and improve on delivery system reforms in Obamacare.