AIDS Testing Ban Is Blamed for High Cost of Insurance

A legislative committee heard testimony Tuesday that a state law that forbids insurance companies from requiring the most sophisticated AIDS tests for life and health insurance applicants is causing havoc in the industry and jacking up premiums for all consumers.

The committee chairman, after a five-hour hearing, said he will introduce a bill to repeal the testing ban. But he agreed with several witnesses who opposed such a change that one result will be a big increase in Medi-Cal costs.

California and the District of Columbia are alone in the nation in forbidding AIDS antibody (HIV) tests for insurance applicants. Another form of AIDS screening, the so-called “T-cell testing,” described as a less sensitive and less reliable test, is allowed under California law.

Illness Not Disclosed

Insurance industry witnesses said that many AIDS victims know they have the disease when they apply for life or health insurance policies but do not disclose the ailment. These victims then become hospitalized and die within two or three years, and the insurance companies are hit with millions of dollars in hospital bills and life insurance payments, the witnesses said. They added that the cost of these payments result in higher premiums for all insurance policyholders.

Assemblyman Patrick Johnston (D-Stockton), chairman of the Assembly Finance and Insurance Committee, said that the 1985 state law banning HIV tests for AIDS passed when the Legislature had doubts about the test’s accuracy. “There are no such doubts any longer about the accuracy,” he said.

He added that testimony Tuesday of several insurance executives persuaded him that the AIDS testing restriction on insurance companies should be lifted.

Cost to State Seen

But Johnston also agreed with health experts who testified that allowing tighter screening of health insurance applicants would result in hundreds of more persons infected with the AIDS virus being denied private health insurance. Without such insurance, Johnston said, AIDS victims must fall back on the state’s Medi-Cal program for health care.

“So do we spread the cost (for health care for AIDS victims) among those who buy private health insurance, or do we spread it wider among the entire population?” Johnston asked. “It seems to me it is more fair to spread it to the entire population.”

No figures were given in the hearing about how much in added cost to Medi-Cal would result from tighter screening of applicants by private insurance companies.

Johnston said he will insist that repeal of the HIV testing ban be accompanied by legislation guaranteeing adequate public financing for care of AIDS victims. “I’m not sure if the two things should go into the same bill or whether there will be two simultaneous bills, but either way, I will insist on the two going together,” he said.

Burden on Hospitals

Susan Haber, director of research for the California Assn. of Public Hospitals, testified that public hospitals already are hard hit financially by caring for AIDS victims without private insurance. She said the association worries about what will happen if the Legislature allows insurance companies to restrict policies even more to persons suspected of having AIDS.

Haber said she is also worried about the “problems of confidentiality” that might arise if insurance companies have more detailed information about people affected with AIDS.

Some other witnesses similarly warned the committee that insurance companies may not be trustworthy about keeping AIDS information confidential

Brent Nance, president of the Concerned Insurance Professionals for Human Rights, testified in opposition to changing the state law banning HIV tests by insurance companies. “It’s very difficult to keep an HIV antibody test confidential,” he said. He added that several civil suits against insurance companies, including one involving alleged public release of an AIDS victim’s name, indicate that the companies cannot be trusted.

But Johnston, at the conclusion of the hearing, said no evidence of confidentiality problems exists among the 49 states that allow HIV testing by private insurance companies.

Insurers’ Statement

In a statement issued at the hearing, the Assn. of California Life Insurance Companies said surveys have found that persons infected with AIDS tend to apply for health and life insurance soon after they acquire the disease. The association said that in one study of health insurance, “55% of the AIDS claims occurred in the first year after the policy issue, and another 38% in the second year--93% in the first two years.”