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.
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