Insurers Drafting Legislation for AIDS Tests : Would Repeal Ban on Such Exams but Agnos Sees Colossal Struggle on Issue

The state’s insurers are drafting legislation that would allow them to require almost all Californians who apply for life or health insurance to submit to a test for the presence of AIDS antibodies, according to the industry’s chief Sacramento lobbyist.

Lobbyist Lewis Keller said Wednesday that the final decision to introduce the legislation, which would repeal a 1985 California law banning the use of such tests by insurance companies, has not yet been taken by the executive committee of his organization, the Assn. of California Life Insurance Companies.

But he characterized the introduction of such a bill by a sympathetic legislator in January as “a likelihood.” Other insurance officials who were contacted said they viewed it as a certainty.

Keller said that if the bill passes, those who tested positive for the antibodies would in most cases be deemed uninsurable and refused policies.

He added, however, that the testing provisions would not apply to group life and health insurance policies where the insured are not prescreened.

Keller added that in the matter of life insurance, only those trying to buy $10,000 or more of coverage might be required to take the tests, although he conceded that nearly all buyers today seek at least that much. He said there would be no dollar threshold applied to those seeking health insurance.

If the AIDS epidemic continues to spread, as public health authorities expect, the solvency of some life and health insurers could be endangered unless they take steps to protect themselves, Keller said.

Word that the state’s insurers were preparing to push for the antibodies tests drew immediate adverse reaction from Assemblyman Art Agnos (D-San Francisco), the author of the law that prohibits use of such tests.

“They’re going to have one colossal fight on their hands,” Agnos declared. “The companies are trying to protect and enhance their record profits of 1986. They’ve been saying they’re going to go broke unless they raise rates through the roof. It’s a hoax.”

Besides, Agnos contended, the tests the insurers may seek to give policy applicants are not entirely reliable, raising the specter that some people who are tested will be erroneously labeled as being infected by the AIDS virus when they have not been exposed to it at all.

Keller, however, said the antibodies tests prohibited by California are far more reliable than the expensive, not-prohibited T-cell tests that insurance companies are already requiring in some instances. He also insisted that insurers have little real choice but to try to protect themselves from heavy AIDS claims.

The insurance lobbyist won a degree of backing from the chief actuary for the state Insurance Department, John Montgomery, who said, “There are some indications that some companies may have solvency problems five years from now as a result of the AIDS crisis.”

Montgomery, noting that many future AIDS victims already hold life and health insurance, said that life and health insurers should already be holding more money in reserve or raising premiums against “the possibility of extra mortality.”

“It’s a little too early to tell,” he said. “At this point, it’s a totally unknown quantity. . . . But we do expect that if some companies don’t set aside additional reserves, they may have trouble by 1991.”

Meanwhile, an insurance executive who supports such new legislation in California said that the odds of dying for anyone testing positive in the antibodies test are more than 10 times the normal mortality rate for the years immediately ahead. A positive antibodies test does not necessarily mean that a person will develop the deadly acquired immune deficiency syndrome.

“A female at 30 in the next five years might be normally expected to face only 2.5 chances of death per 1,000,” said Dave Gooding, executive vice president of TransAmerica Occidental. “But among those testing positive, probably the minimum one would expect would be 40 deaths per 1,000.

“At TransAmerica Occidental, we would not regard anyone testing positive as insurable,” said Gooding, who said that unless such tests are legalized, all insurance policyholders may see their premiums skyrocket to pay for the claims of AIDS victims.

“Right now, people can get some such antibodies tests on their own and find out for themselves. They then buy insurance, and we’re kept in the dark,” Gooding said.

Keller said the insurers recognize that they will not get such legislation passed without a struggle, and he said any bill that would be proposed would contain strict safeguards of confidentiality so that information obtained by insurers would not go to employers and others.

California, Keller said, “is the only state in which we are prohibited from using the antibodies tests.”

“It puts us at a distinct disadvantage,” he said.

But this statistic was challenged by Ben Schatz, director of the AIDS Civil Rights Project of the National Gay Rights Advocates organization. He said he had done a survey that shows that either the legislatures or the insurance departments in six states and the District of Columbia bar use of the tests. He said the states are, in addition to California, Massachusetts, Michigan, North Dakota, Wisconsin and Arizona.

“Insurance companies are viewing testing in a vacuum,” Schatz said. “The concern here is not only reliability of the tests, but many, many civil rights violations. The insurance companies are trying to force people to choose between their ability to obtain insurance and their civil rights.”

Civil Rights

Keller, however, insisted that confidentiality safeguards would keep civil rights violations from occurring.

The T-cell tests many companies are using in California cost $40 each, while the three antibodies tests would cost only $8.75, Keller said.

“We want to administer to everybody at a reasonable cost,” he added.

Keller said some state health authorities have certified the reliability of the antibodies tests.