Cost of AIDS Near $6 Billion--and Climbing

Times Staff Writer

AIDS, the incurable immune-system disease that is taking a grim toll among male homosexuals and intravenous-drug users, also is beginning to place substantial new burdens on the nation’s medical care systems and American society as a whole, according to public health experts who are studying the escalating epidemic.

The federal Centers for Disease Control conservatively estimated the cost of caring for the first 9,000 AIDS patients in the United States at more than $1.25 billion, and $4.38 billion in “lost productivity” from the disability and deaths of so many young people.

The number of persons afflicted by the disease now exceeds 13,000--a number that is expected to double in the next year.

‘Greater Strains’

“It is likely that the AIDS epidemic will place increasingly greater strains upon the health care system in cities and counties with a large number of cases, as well as on both public and private sources of health care financing,” said Peter S. Arno of the University of California’s Institute for Health Policy Studies in San Francisco, who conducted a study of AIDS medical care costs in that city.

“The problem will intensify as the epidemic continues to grow, particularly in high-incidence areas such as New York, San Francisco, Los Angeles and Miami, which together account for approximately 60% of the nation’s total reported cases,” Arno added. “In addition, there is convincing evidence that it is spreading geographically across the nation.”


AIDS, or acquired immune deficiency syndrome, attacks the body’s immune system and leaves it vulnerable to otherwise rare infections. In the United States, the majority of AIDS patients have been male homosexuals or bisexuals, users of intravenous drugs and their steady sexual partners.

The AIDS virus is transmitted primarily by an exchange of body fluids through sexual contact or the use of unsterile hypodermic needles. As of last Monday, 13,074 cases had been reported and the death toll stood at 6,611.

According to Dr. Ann Hardy, an epidemiologist with the Centers for Disease Control who conducted the AIDS cost study, the typical AIDS patient lives an average of 56 weeks after the time of diagnosis.

By the time he dies, his medical costs will run about $140,000 and he will spend an average of 31 days each time he is hospitalized. Daily hospital charges for AIDS patients range from $830 to $1,100, compared to the average daily charge of $350 for non-AIDS patients in acute-care hospitals.

Using tables and figures from the National Center for Health Statistics and the Social Security Administration, Hardy said that she calculated the theoretical lost income from both disability and early death. She said the 9,000 patients studied lost a total of 7,500 “work years"--worth an estimated $162 million--during their illnesses, and $4.2 billion in potential income was lost as a result of their deaths.

Substantial Impact

While the incidence of AIDS nationally is not as great as that of cancer or heart disease, Hardy said that “in areas where AIDS is high, the impact is substantial. There are some areas that are really struggling and feel the burden.”

Infectious Disease Outbreak

She added: “If the number of cases of AIDS doubles in the next 10 months, it may increase the total costs of infectious diseases in this country by 30% to 50%, and health planners need to be aware of that. Infectious diseases make up less than 5% of all diseases--and in this day and age, are not a major cause of death--but AIDS is different. The costs are going to continue to increase unless there is the development of an effective treatment.”

Rep. Henry A. Waxman (D-Los Angeles), chairman of the House energy and environment subcommittee on health, said: “AIDS is going to cost billions. It’s a catastrophic illness. It’s going to be very expensive to deal with.”

Hardy said that 90% of AIDS patients are between 20 and 49 years old, and most are in their 20s or 30s--at an age ordinarily considered the prime of life.

For this reason, the number of AIDS patients without medical benefits “is large and increasing,” according to Nancy Langer, spokesman for Lambda Legal Defense and Education Fund, a homosexual rights organization.

“You don’t think of people this young needing long-term disability health care coverage,” she said. “Many have little or no medical or life insurance. Many people are self-employed, work for small companies or have not been in the same job for 10 or 20 years, like someone who is 60. Their insurance profile reflects that instability and frailty. Also, a large proportion of AIDS patients are minorities.”

In addition, she said, many AIDS sufferers have been dismissed from their jobs because of the disease, and thus have lost group medical coverage. Others with good-paying jobs and full medical benefits will resign, she said, because “they have led a closeted life to survive in corporate America, and can’t cope with coming out.”

Consequently, many are turning to Medicaid, the federal government’s health program for the needy, or elsewhere for help.

Despite this mounting evidence that the medical costs of AIDS are going to be staggering, it appears that little has been done on the federal level to examine the impact or plan for it.

“The Public Health Service does not deliver health services,” said one federal health official who requested anonymity. “The burden is not a question for us, really, except in broad philosophical terms.”

Officials at the Health Care Financing Administration said they could not provide data on how many AIDS patients are on Medicaid or on how many had applied for it. Nor has the agency begun to examine those numbers or the costs involved. In California, Medicaid is known as Medi-Cal.

Concern of the States

C. McClain Haddow, acting head of the agency, explained that the figures are unavailable because even though the government shares such costs, “the primary administrators are the states.” He acknowledged, however, “That doesn’t mean we shouldn’t have a sense of what the numbers are.”

The insurance industry, concerned about high medical costs in a heretofore healthy age group, is watching the disease trends carefully but says it is too early to predict whether higher premiums will result.

“We are concerned, but we are not yet panic-stricken,” said Charlotte Crenson of Blue Cross-Blue Shield. “It increases costs more than we would like, but at this point there is no reason for great anxiety.”

Waxman, whose subcommittee has scheduled hearings later this month on the financial consequences of AIDS for the medical care system, said: “Federal or local governments will be the ones that will have to pay when patients lose their insurance or exhaust their resources. People are going to be affected in greater numbers, with no end in sight. We must look at alternative care systems.”

One such system that seems to be working is in San Francisco, where one of every 600 persons contracts AIDS. There, San Francisco General Hospital--with $9 million a year in city support--has joined with local agencies and community voluntary organizations to provide a comprehensive array of services for AIDS patients. As a result, costs in the Bay Area are dramatically lower than anywhere else in the country.

Extra Outpatient Care

In addition to the hospital’s inpatient AIDS care unit, which is expanding, there is a fully staffed outpatient clinic offering many medical procedures that other hospitals offer only on an inpatient basis. Furthermore, outside voluntary organizations--such as the Shanty Project and the AIDS Foundation--and community agencies such as the Visiting Nurses Assn. provide AIDS patients with counseling, housing, in-home care and other services that shorten their hospital stays and enable them to remain at home for longer periods of time.

“The message we hear from other cities is that patients have to stay in the hospital because there are no community resources to go to,” said Dr. Paul Volberding, an oncologist with San Francisco General who is responsible for setting up the AIDS program.

“Considering how expensive that is, and that these people don’t have long to live, we think it’s vital to keep them at home as long as possible,” he said.

Also, Volberding said, patients who are near death--too ill to come to the hospital--are often cared for by workers from Hospice of San Francisco, another organization supported by the city.

Hospice Care at Home

“It is not the usual kind of hospice--it goes to the patient,” he said. “People beyond the point of being treated can be cared for at home. They provide as much care as needed, with pain medication, oxygen--whatever they need to make them comfortable and allow them to die at home.”

Arno said the total cost of caring for an AIDS patient in San Francisco ranges from $25,000 to $32,000, compared to the $140,000 figure cited by the CDC for the rest of the country.

“San Francisco General has the shortest length of stay of any hospital in the country for AIDS treatment, 11.4 days,” Arno said. “That compares to 22 days in Los Angeles, 31 in Philadelphia and 50 in New York City.”

He added: “Even more important, the extensive network outside the hospital--all these social support and medical support services outside the hospital exist in San Francisco, they don’t exist everywhere else.”

Volberding credits the growth of the program largely to the city’s support.

“The response of the city government is something we’re very proud of,” he said. “It’s a liberal city. There was a budget surplus at the time, so funding could be done without cutting into other programs. San Francisco has a large, identifiable gay community with a lot of political influence. Plus, a lot of us were honestly interested and weren’t afraid of the disease, or afraid of taking on a disease that affected primarily homosexuals. We didn’t have that bias. Those are the reasons why what we’ve done here has worked.”

Model for Other Cities

While many point to San Francisco as a model for other cities, some, including Volberding, are not certain that the San Francisco program could be applied elsewhere with the same success.

New York, for example, is struggling to care for almost half of all the AIDS patients in the country and has an AIDS population of which 40% are intravenous drug users. They are considered “less healthy” than the middle-class, well-educated gay population of San Francisco--and thus more difficult to treat.

Nevertheless, the New York City Department of Health dispatched a medical team to study the San Francisco system last January. “While our trip was useful, we realized we would have to come up with our own model,” said Omar Hendrix, director of planning for the New York Health and Hospitals Corp., the largest public hospital system in the country.

“Treating this disease requires a heavy level of resources: more drugs, more expensive drugs, more intensive nursing care,” he said. “The length of hospital stay is long--it’s the longest in the country. In some cases, we have IV drug users and homeless people who medically should no longer be in the hospital, but there is no place for them to be discharged to.”

In March, New York City announced $6 million in new funds for AIDS-related support services in the public system, including more resources and staff for acute care, expanded home care and home-based hospice services and counseling.

“The city realized something had to be done,” Hendrix said.

Impact Average figures compiled from the first 9,000 AIDS patients in U.S.

Age range 30-39 Time from diagnosis to death 56 weeks Cost of hospitalization per patient $140,000 Hospital cost per day for: Typical AIDS patient $830-$1100 Typical non-AIDS patient in acute care $350 Total hospital days accrued 1,510,000 Direct health care cost $1.2 billion Work years lost 7,500 Income loss to patients during illness $162 million Potential income loss $4.2 billion Total loss of productivity $4.38 billion Current Toll U.S. figures as of Sept. 9 Total reported cases 13,074 Total deaths 6,611

Urban CasesNumber of cases reported in major cities since June, 1981.

New York 4,294 San Francisco 1,492 Los Angeles 1,116 Miami 430 Newark 326

Source: Centers for Disease Control