For most of his life, Carl Goulden had near perfect health. He and his wife, Wanda, say that changed 10 years ago. Carl remembers feeling, "a lot of pain in the back, tired, fatigue, yellow eyes — a lot of jaundice."
Wanda, chimes in: "Yellow eyes, gray-like skin." His liver wasn't working, she explains. "It wasn't filtering."
Carl was diagnosed with hepatitis B. Now 65 and on Medicare, he had a flower shop in Littlestown, Pa., back then, so had been buying health insurance for his family on the market for small businesses and the self-employed.
The medications to manage Carl's hepatitis cost more than $10,000 a year — and if he ever needed a liver transplant, as some people with hepatitis eventually do, the further costs could be formidable. Thank goodness they had health insurance, the couple thought.
But then, Carl says, "the insurance renewals went way up."
After a few years he could no longer afford to buy the coverage — more than $1,000 a month — and also maintain his business. So he dropped the health insurance.
"I was devastated," he says, "because I didn't know when my liver might fail."
But that steep increase in his insurance rate was completely legal, says Pennsylvania insurance commissioner, Teresa Miller. And back then, before the Affordable Care Act became law, a patient like Carl Goulden might have had a very hard time buying another policy; he likely would have been turned down by other insurers because he now had what's called a "pre-existing" medical condition.
A family like the Gouldens would "just have been out of luck," Miller says.
Pennsylvania: The wild, wild West
Before the ACA, states had differing approaches to handling pre-existing conditions.
Pennsylvania was typical. Until the ACA mandated that insurers treat sick and healthy people equally, buying insurance was the wild, wild West.
Insurers couldn't overtly kick people off a plan if they got sick, but they could find ways to charge them a lot more, even those whose chronic condition wasn't all that serious — such as acne. For individuals looking to sign up in the first place, "an insurance company could simply decline to offer you insurance at all because of your pre-existing condition," Miller says.
Insurers who did offer a policy to someone with a pre-existing medical condition might have done so with a catch — the plan could require a waiting period, or might exclude treatment for that condition.
"So, let's say you had diabetes, for example," Miller says. "You might have been able to get coverage for an unexpected health care need that arose, but you'd still be on your own for any treatment and management of your diabetes."
From the perspective of the insurance company, these practices were intended to prevent the sick from signing up for a health plan only when they needed costly care.
Pennsylvania did try to partially solve this problem. It created a more scaled-back health plan, called Adult Basic, for those with lower incomes who didn't have any coverage. Lots of people signed up, but the plans didn't include coverage for mental health care, prescription drugs or more than two nights in a hospital. Even so, Miller says, the strategy proved too expensive for the state.
"That program was spending $13 million to $14 million a month when it was shut down," she says.
More than 30 other states dealt with pre-existing conditions by setting up what are called "high-risk pools," a separate insurance plan for individuals who couldn't get health coverage in the private market.
These plans could be real lifesavers for some people with conditions like cancer — which can cost tens if not hundreds of thousands of dollars to treat.
The experiences with high risk pools varied, but states faced lots of challenges, says John Bertko, an insurance actuary with the state of California. And the main problem was the high cost.
"The one in California, which I was associated with, limited annual services to no more than $75,000, and they had a waiting list. There was not enough money," Bertko says. "The 20,000 people who got into it were the lucky ones. At one point in time, there were another 10,000 people on a waiting list."
The pools also had catches; premiums were expensive, as were out-of-pocket costs. And plans often excluded the coverage of pre-existing conditions for six months to a year after the patient bought the policy.
New Jersey: Pre-existing conditions were covered, but with a catch
Around that same time, across the Delaware River, the state of New Jersey was trying something different.
"Insurers could not take health status into account," says Joel Cantor, director of Rutgers University's Center for State Health Policy who has been analyzing the New Jersey experience.
Before the ACA, New Jersey was one of just a handful of states that prohibited insurers from denying coverage to people with pre-existing conditions. Insurers also weren't allowed to charge people a whole lot more for having a health issue, and the plans had to offer robust coverage of services.
There was a one-year waiting period for coverage of a pre-existing condition, but a larger issue became cost. The entire individual market in New Jersey became expensive for everyone, regardless of their health status, Cantor says. Because there was no mandate to have health insurance coverage, those who signed up tended to really need it, and healthy people did not enroll.
And so, "the prices went up and up," he says. And the premiums and enrollment "went down and down."
The state tried to address this in the early 2000s by introducing a "skinny" health plan, Cantor says.
"By that I mean very few benefits," he explains. "It covered very, very limited services."
The plan was affordable and really popular, especially among young and healthy people and about 100,000 people signed up. But if something did happen, or if a person had a chronic health need, lots of the costs shifted to the individual.
"It left people with huge financial exposure," he says.
That's, in part, why the ACA included a rule that insurance plans now have to offer good benefits and be available to everybody. In exchange, insurers have the mandate and subsidies — so that everybody will buy in.
Cantor says these experiences point to an ongoing dilemma in health care: A small portion of people consume a big chunk of health care costs. It's hard to predict who among us will cost a lot — or when. So, the question becomes, what kind of care should insurance plans cover and who should shoulder that cost?
LINDA WERTHEIMER, HOST:
Tuesday is Tax Day, and we're going to zero in on those tax questions dealing with health insurance. Health care reporter Julie Rovner will help us out with that in a few minutes. First, this reminder of why health care factors into our tax returns in the first place. It has to do with the Affordable Care Act and the law's effort to protect people with pre-existing conditions. Reporter Elana Gordon from Philadelphia member station WHYY has more.
ELANA GORDON, BYLINE: For most of his life, Carl Goulden had near-perfect health. He and his wife Wanda say that changed 10 years ago.
What were the symptoms?
CARL GOULDEN: A lot of pain in the back, tired, fatigue.
WANDA GOULDEN: The yellow eyes, gray-like skin.
GORDON: He was diagnosed with hepatitis B. Goulden had a flower shop in Littlestown, Pa., so he was buying insurance for his family on the market for small businesses and the self-employed. Good thing he had it. The meds he needed just to manage Hepatitis B cost more than $10,000 a year - never mind what the costs would be if he ever needed a liver transplant. But then something unexpected started happening.
C. GOULDEN: Insurance renewals went way up.
GORDON: He says after a few years, he could no longer afford the coverage - more than a thousand a month - and maintain his business. He dropped the insurance.
C. GOULDEN: I was devastated because I didn't know when my liver might fail.
W. GOULDEN: You know, it's not fair. Because you have a pre-existing condition, you cannot be covered now. Come on. You know, all this isn't right.
GORDON: But it was completely legal, says Pennsylvania insurance commissioner Teresa Miller.
TERESA MILLER: You may just have been out of luck.
GORDON: Miller says before the ACA mandated that insurers treat sick and healthy people equally, this small individual insurance market was the wild, wild West. Insurers could not overtly kick people off a plan if they got sick, but they could find ways to charge them a lot more, even people with conditions like acne or high blood pressure. Plus, if you were uninsured...
MILLER: ...An insurance company could simply decline to offer you insurance at all because of your pre-existing condition.
GORDON: Miller says companies who did offer insurance might have a catch. The plans could exclude treatment for that pre-existing condition.
MILLER: So let's say you had diabetes, for example. You might have been able to get coverage for maybe an unexpected health care need that arose, but you would still be on your own for any treatment and management of your diabetes.
GORDON: Pennsylvania did try to create a plan for people with lower incomes who were uninsured, but the plan didn't include mental health care, prescription drugs or more than two nights in a hospital. And even that proved too expensive for the state.
MILLER: And so that program was spending 13 to 14 million per month when it was shut down.
GORDON: Across the Delaware River, New Jersey tried something else.
JOEL CANTOR: Insurers could not take health status into account.
GORDON: Joel Cantor is a health researcher at Rutgers and says before the ACA, New Jersey was one of a handful of states that prohibited insurers from denying people with pre-existing conditions coverage. And the state required that insurers provide good insurance for about the same price as covering a healthy person, but...
CANTOR: ...Of course, there were consequences to doing this.
GORDON: The cost. Cantor says the whole individual market in New Jersey became expensive for everyone. There was no mandate that people had to have insurance, so only those who really needed coverage signed but then...
CANTOR: ...Prices went up and up and up - the premiums - and enrollment went down, down, down.
GORDON: The state ended up offering a much more bare-bone plan. People bought it, but it didn't cover much. With the ACA came the rule that insurance plans had to cover more and be available to everybody. In exchange, insurers got the mandate and subsidies so everyone would buy in. Cantor says these experiences point to the ongoing dilemma in health care. A small portion of people consume a big chunk of health care costs, and it's hard to predict who among us that will be. So the question becomes what kind of care insurance plans should cover and who should shoulder that cost. For NPR News, I'm Elana Gordon. Transcript provided by NPR, Copyright NPR.