To quote the one thing Donald Rumsfeld said during the Bush years that is definitely true, there are “known knowns” – things we know that we know; there are “known unknowns” – things we know we don’t know – but there are also “unknown unknowns” … things we don’t even know we don’t know.
At first blush, the president’s “keep your plan” fix for the 1.5-3 million Americans who face potential cancellation of their insurance plans, because those plans do not comply with the Affordable Care Act, seemed like a “known known.”
We know that the insurance products that the ACA sidelined are considered “substandard” based on their failure to offer some basics, like limited deductibles, no lifetime caps on coverage, free health screenings like mammograms and colonoscopies, and the opportunity for people with pre-existing conditions to enroll.
We also know that these plans are expensive, relative to the insurance you get from an employer, but are cheaper than they would otherwise be, because they are selective, targeting only healthy customers, because they are volatile, subject to “recision” (meaning cancellation) at any time, at the insurance company’s discretion, and they are renewed annually, so insurers can scour their customers’ medical history for signs of previous illness. And they have very high deductibles, which meant it would take a very long time before the insurance company would ever have to write a check.
Presumably, allowing people to stay on those technically illegal plans would ease their short-term anxiety (so long as they didn’t try to actually use the insurance, because then, well, recision…) And requiring insurance companies to disclose what their customers are giving up by sticking with the plans would create transparency. And there’s the matter of Democratic politicians, for whom a solution might ease the political pressure ahead of the 2014 elections. Problem solved, right?
Well, a funny thing happened on the way concerning the “known knowns.”
What the “fix” fails to address, is what happens if someone, knowing full well the deficiencies of their health plan compared to compliant ones, chooses to stick with their coverage … and then they get sick.
Because their plans don’t prohibit recision, couldn’t the insurance company legally cancel their policy on the basis of their pre-existing condition? How could the law credibly treat insurers differently based on whether they are dealing with a “Keep Your Plan” customer or an ACA one?
Moreover, would a person who gave up the protections of the Affordable Care Act be able to get them back after their policy has been yanked by the insurance company, which after all, was given the green light by the federal government to keep offering the high deductible, capped-use plans to existing customers? If KYP were to try and seek legal remedies against their insurer under the Affordable Care Act, it’s hard to imagine how they’d prevail, even if they could afford to go to court.
And if they can’t prevail, won’t the taxpayer then be on the hook for KYP’s catastrophic care?
Because at the point our friend KYP is dropped, they’re likely to be sick – which is the reason they’re being dropped in the first place. And without a health insurance plan – now because of their insurer’s grandfathered-in policies, not “Obamacare” – KYP is likely headed to the emergency room, or into bankruptcy; precisely the outcomes the Affordable Care Act was designed to prevent.
There are more “uknown unknowns”:
Does KYP become eligible to buy insurance on the exchange, or to belatedly qualify for federal subsidies? Maybe, but now that they’re sick, their insurance plan is going to cost a whole lot more. And that means the rest of us taxpayers could wind up footing the bill for larger subsidies than they would otherwise have needed, had they switched to a compliant plan in the first place.
Worse, the states most likely to grasp for the “keep your plan fix” are red states like Texas and Florida, which already have the highest numbers of uninsured, and which are rejecting the federal expansion of Medicaid, meaning they will generate the largest numbers of out-of-luck KYPers, who now won’t have Medicaid to fall back on, either. Congratulations, donor states. You just picked up potentially more than a million new red staters to subsidize.
With so many “unknown unknowns,” it seems that with closer scrutiny, the White House’s fix looks more like a foul.
Follow Joy Reid on Twitter at @thereidreport.