What version of Premiere Elements are you using and on what computer operating system is it running?
I have run into the same problem. There are other reports of this problem as well. I have a HD webcam that will only display as SD when used through the Premiere Elements Add Media/Webcam or WDM.
I have planned to analyze this in a blog post but have not gotten around to it yet.
Right now I do not think there is a fix other than to find that certain HD webcam that Premiere Elements will recognize as HD. That seems to be the case in this online video tutorial
Note at the end how the output looks 16:9 rather than 4:3. For informational rather than promotional reasons I mention that it looks like a Logitech HD Pro Webcam C92 was used in that video tutorial on the Premiere Elements 12 webcam feature.
Thanks for the reply, even though it seems there is no simple answer to the problem...
I use Adobe Premiere Elements 12 on Windows 7. I can't test on my Mac since it lacks the USB3 port my device uses!
Thanks for the follow up.
If any further developments there on the issue, please let us know. I will do the same.
In my case, attempts to look at this from a "device driver" point of view have been unsuccessful.
More on this another time.