The Redlining of AIDS
Gwen is a thirty-seven-year-old factory worker on Chicago's South Side. After testing HIV-positive a year and a half ago, she read through every word of her employee health-insurance plan, something she, like most of us, had never done before. There, on page eighteen, were the words that sent an icy stab through her stomach: The policy covered everything except AIDS.From where I sit, cases like Gwen's are a dime a dozen.After nearly five years at the AIDS Legal Council of Chicago, I had heard her story many times. But the other people who had called me with the same dilemma never called back, unwilling, I assumed, to pursue legal action against a current employer. I asked Gwen to send me her policy and mentally stamped "closed -- withdrew" across her file.To my surprise, Gwen's policy showed up on my desk a week after our initial phone conversation. When I read the section she had highlighted, my jaw dropped. The plan would not pay "expenses in connection with the care or treatment of [AIDS] or an illness or condition resulting from AIDS unless AIDS was contracted without fault or responsibility" (emphasis added). I showed the policy to my director. Her eyes bulged. I phoned a few well-seasoned AIDS attorneys around the city. No one had ever heard of anything quite so bald.Gwen's predicament typifies an alarming new trend in employment-based health plans: capping, excluding, or in some way limiting coverage for HIV-related illnesses. Employers are singling out HIV, even though they do not limit coverage for other, equally expensive conditions. Only a few years ago such "AIDS caps" were curious rarities. In his 1992 overview of the insurance industry's response to AIDS, Urban Institute senior research associate Randall R. Bovbjerg wrote, "HIV/AIDS has not been singled out in the large-group market not only because disease-specific provisions are not traditional but also because incidence remains low in most areas."But certain traditions -- not to mention sero-prevalence rates -- change quickly. Since 1992 the Equal Employment Opportunity Commission has brought action against some two dozen insurers and employers for imposing AIDS caps, and major AIDS legal-service providers across the nation are taking on similar cases, from the American Civil Liberties Union to the Lambda Legal Defense and Education Fund, from New York's Gay Men's Health Crisis to San Francisco's AIDS Legal Referral Panel.The cases conform to a familiar pattern: After finding out an employee is HIV-positive, employers cap insurance benefits for AIDS, typically reducing million-dollar lifetime coverage to $5,000 or $10,000 -- an amount which won't even cover a year's worth of anti-viral drugs. In nearly all AIDS-cap cases, employers are self-insured, pooling their own funds against future health-care costs rather than paying premiums to third-party insurers. Most state insurance regulations prohibit disease-specific caps, but self-insured plans are almost entirely exempt from state regulations -- making them particularly attractive to cost-conscious employers. More than half the employment-based health plans in the country are self-insured. Gwen's was one of them.In the first insurance-cap case to gain national notoriety, McGann vs. H&H Music Company of 1990, a Texas federal judge let an employer's $5,000 AIDS cap stand, writing that federal law at the time did not prohibit an employer from refusing to cover AIDS "even though the employer's decision in this respect may stem from some 'prejudice' against AIDS or its victims." As attorney Thomas E. Bartrum points out in the Kentucky Law Journal, that argument allows "outright discrimination against HIV-infected persons as long as this discrimination is not directed toward a particular individual." The U.S. Supreme Court refused to hear McGann's appeal in 1992.The impulse to yank health insurance from people with HIV has also seized the New Jersey Department of Insurance, which presides over the state with the fourth-highest reported incidence of HIV infection in the country. On October 2, 1995, the Department proposed a regulation that would have allowed companies offering health -- or life-insurance policies to groups of fifty or more to screen applicants for HIV and reject those who turn up positive."If an applicant refuses to submit to an initial or repeat screening of the immunoblot test," the regulation reads, "then the insurer may [also] decline coverage." While insurers have been able to exclude people with HIV from individual policies for years -- thanks in part to some underhanded lobbying from the industry back in the 1980s -- these new attempts to keep HIV-positive people off large-group insurance policies are unprecedented.The proposal appeared without announcement in the New Jersey Register -- and, following a public uproar, died two months later. But the fact that the state body responsible for overseeing New Jersey insurance practices proposed the regulation speaks volumes about whose interests the department serves. Not to put too fine a point on it: A 1995 ten-state survey by the Consumer Federation of America found that one in five lawmakers on state legislative insurance committees works for the insurance industry.All over the country, states have shown they are willing to cut off health care for people with AIDS. In 1989, the South Carolina legislature created the South Carolina Health Insurance Pool (SCHIP), a quasi-public entity designed specifically to insure the uninsurable. SCHIP denies coverage to people with one and only one condition: HIV disease. At least twenty-seven states have similar state risk pools, but only South Carolina's excludes HIV. While the original bill, written by the state's Department of Insurance, contained no such exclusion, the legislature tacked one on, apparently needing no actuarial research to justify it. Last summer a federal judge let the exclusion stand, citing Americans with Disabilities Act language that allows caps if they are "not inconsistent with state law" -- a particularly dangerous precedent as Congress prepares to transform Medicaid into block grants, giving states final say in determining which treatments Medicaid will cover. SCHIP attorney Ruskin C. Foster added the coup de grace when he stated, "I'm arguing the law, not equity."Actually, Foster is arguing something much uglier: that people with HIV, alone among individuals facing catastrophic illnesses, are not entitled to adequate health insurance. Medicaid will pick them up, supporters often argue, and in fact the Medicaid AIDS ranks have swollen in recent years. Medicaid now covers an estimated 40 percent of all Americans with AIDS, paying as much as 25 percent of all HIV-related health-care costs in the nation.But people with AIDS relegated to Medicaid coverage may be on a fast track to death. A recent study, conducted by Northwestern and Duke University medical schools, the RAND Corporation, and the Department of Veterans Affairs, reported that AIDS patients with pneumocystis carinii pneumonia (PCP) -- the number-one killer of people with AIDS -- were 73 percent more likely to die in the hospital if they were insured under Medicaid than if they carried private coverage. The study's researchers found that those on Medicaid were 40 percent less likely to undergo bronchoscopy, a key PCP diagnostic test -- perhaps because the reimbursement physicians receive from Medicaid for a bronchoscopy can be as little as one-tenth of that received from a private insurer.Gwen's case illustrates another peculiar feature of AIDS-policy makers and insurers are calling into question the "fault or responsibility" of people affected when weighing their right to health care. An anonymous member of New Jersey Governor Christine Whitman's administration told The New York Times that New Jersey's proposed regulation was intended in part to force individuals to face the consequences of their actions."There is a body of opinion out there that AIDS is a behaviorally based illness," he said. "It is preventable to the extent that if you do not engage in certain conduct, you will not be at risk for this condition."His reasoning, parroted by numerous lawmakers and pundits throughout the first fifteen years of the epidemic, rests upon the dubious assumptions that high-risk behaviors are unambiguously and monolithically defined, and that avoiding HIV infection is easy.The idea of forcing people with HIV to face the consequences of their actions, besides its enormous callousness, ignores HIV's latency period, which can be as long as a dozen years. If I test HIV-positive tomorrow, I might well be facing the consequences of actions I took in 1984 -- before safe-sex guidelines were clearly formulated, before an HIV test was available, and well before President Reagan bothered to mutter the word "AIDS." One wonders how many insurance executives could accurately and exhaustively list every behavior that could put one at risk for HIV; their stance suggests that every potential customer should know -- and should have known for more than a decade.The newest public-service campaign from the Centers for Disease Control and Prevention, directed toward "at-risk youth," epitomizes the inadequacy of AIDS education. President Clinton's national AIDS policy director, Patsy Fleming, unveiled the ads on World AIDS Day last December. The spots, Fleming assured all of us in the audience at a fancy Chicago hotel, are "frank" and "candid." (She also said one of them was directed specifically at gay youth, although none of my gay colleagues nor I could figure out which of the twelve it was.) One spot ended with a young woman admonishing the viewer, "Love won't protect you." This wise message was immediately neutralized in the next spot, which concluded with another young woman declaring self-righteously, "The next time I have sex is when I'm married," as if a marriage license were a foolproof vaccine against HIV.For the most part, insurers keep their personal biases against people with AIDS under wraps, arguing instead that AIDS will bankrupt them. But according to the industry's own survey, group accident and health-insurance claims for AIDS in 1994 amounted to 1 percent of total claims paid, down from 1.3 percent in 1993. The annual survey, conducted by the American Council of Life Insurance and the Health Insurance Association of America, estimates the total costs of AIDS claims alone, offering no data on other major illnesses for comparison. As one researcher at HIAA confided to me, "There was a concern that AIDS would be a costly disease for the insurance industry. I don't know of any other illness-specific survey conducted by either group."Self-insured employers continue to argue that AIDS caps are actuarially justified -- although they have never produced that actuarial data, even when they have been sued by the federal government.More often than not, they defer to the "lifetime cost" of AIDS, and for good reason. So many estimates have emerged that it's easy to find a number to support any agenda. In fact, the insurance industry did just this back in the mid-1980s, in its successful attempt to legalize HIV screening against people seeking individual life and health-insurance policies.Let's imagine that AIDS does threaten the financial stability of the insurance industry. Say, for example, that Empire Blue Cross/Blue Shield, one of the largest private payers for AIDS care in the nation, pays out 50 percent of its total claims toward health care for people with HIV (in reality, the figure is around 2 percent for the first twelve years of the epidemic). Even if such a dire scenario came true, the industry would have no one to blame but itself. Over the past sixty years or so, insurers, catering to the cost-cutting directives of employers, have created smaller and smaller risk pools for themselves, making it more and more difficult for them to absorb the costs of AIDS, or any catastrophic illness, for that matter.The fundamental concept of group health insurance -- to spread the high health-care costs of a few among a large group of people who incur comparatively little expense -- has been replaced with an insistence on restricting insurance to those who need it least.Insurance historian Robert Padgug points out that New York Blue Cross companies in the 1930s created the models for our current health-insurance system. They based their policies on community rating, by which entire populations were insured under a single policy. Community rating allowed Blue Cross to spread losses across a large geographic region. Premiums were the same for everyone covered, and Blue Cross refused almost no one.After World War II, employers devised a plan to cut their insurance costs: experience rating. Under this system, employers insisted that they be charged premiums based upon the actual health-care costs incurred by their employees. Since these individuals were typically younger and healthier than the general population, they were better (cheaper) risks. Commercial insurers, seeing a burgeoning new market, happily complied, giving themselves a competitive advantage over companies offering community-rated policies."Insurance risks were thus spread among a relatively small base," Padgug writes, "with some, such as the elderly, the unemployed, the chronically ill, and the poor, in large measure left out of the system." The legacy of exclusion is alive and well half a century later. By the 1970s, employers began to self-insure, cutting costs again and avoiding much state insurance regulation. The movement toward self-insurance further reduced the size of risk pools. Under a self-insured plan an isolated company incurs no risk other than that of its employees. In such a system, a few employees facing major illnesses can wreak havoc on a smaller plan's solvency. The 1980s saw an unprecedented ballooning of health-care costs, leading more large groups to self-insure and encouraging commercial insurers to come up with even stricter underwriting requirements. Despite recent, tentative gropings toward a national health-care plan, the proposals with the broadest support mandate employer-provided coverage, a policy that will exacerbate an already desperate situation. The insurance industry, for its part, opposes national health insurance, arguing that it is better able to manage health-care costs than the federal government.The real problem, of course, is that unlike most Western European nations, the United States does not see health care as an essential right of citizenship. Market forces, rather than social concern, drive the insurance industry. As Padgug writes, "Rather than operating according to socially determined rules to which all must conform for the common good, each party within the system acts to avoid costs that can be passed to others."The Equal Employment Opportunity Commission may remain diligent, stating in no uncertain terms that AIDS caps are a violation of the Americans with Disabilities Act. It may even continue to pursue aggressive litigation. But we legal advocates are stamping out brush fires while all around us the forest burns. Without a drastic overhaul, the insurance system, or at least the part of it that covers the unhealthy and unwealthy, will go up in smoke.Gwen and I spoke several times on the telephone in the weeks after I received her policy. She was afraid to antagonize her employer and terrified that her HIV status might become general knowledge among her co-workers. Eventually she agreed to work with one of the Council's volunteer attorneys, who was able to negotiate successfully with Gwen's employer. Since Gwen had been infected with HIV from her husband, the employer agreed that "AIDS was contracted without fault or responsibility." If Gwen ever put in an HIV-related claim, her employer assured us, the company would have to pay it. Although Gwen was painfully aware of the potential unfair use of her policy's exclusionary language against other, less socially accepted employees, she feared that further legal action might get her fired.Gwen's file is now marked "closed-intervention." We won the battle, but couldn't fire a single shot in the war.A few months later, Bob called. His million-dollar policy had a $50,000 AIDS cap. He was on disability and he was willing to sue. The case is currently before an administrative law judge at the Illinois Department of Human Rights. Bob requires daily infusions and is more than $100,000 in debt.Accepting a member into an insured group is an act of social solidarity. "We" pool our resources toward future health-care costs, understanding that those of "us" who incur little expense will subsidize those who are less fortunate. The arrangement works so long as "we" all see ourselves as somewhat equally "at risk" -- any one of us might get cancer or diabetes or end up in a serious accident, for example. But perceived solidarity ends when HIV enters the picture. Perhaps the most dangerous message that AIDS insurance caps reinforce is that "we" are not at risk for HIV infection. People with AIDS are "others," in another part of town, with dirty habits and immoral lifestyles. No message could better ensure the continued spread of the epidemic.Some of the names in this article have been changed.