Magazine article Risk Management

On Excluding the AIDS Crisis

Magazine article Risk Management

On Excluding the AIDS Crisis

Article excerpt

DUE TO THE insidious nature of the H.I.V. virus, medical efforts to find a vaccine for the infection that causes AIDS are inching along. However, as researchers around the world work overtime to find a cure, whole populations, in some cases, are becoming infected with the virus at an alarming rate.

According to Tom Skinner, a spokesman for the Centers for Disease Control (CDC) in Atlanta, by the end of 1993, it is estimated that between 390,000 and 480,000 cases of AIDS will exist in the United States alone, and that approximately one million Americans will be infected with the H.I.V. virus. On a global scale, the problem is even-worse. According to recent World Health Organization estimates, by the year 2000, 40 million people are expected to be infected with H.I.V., with most of that exposure occurring in Africa, Asia, Latin America and the Caribbean.

According to U.S. Banker Magazine, the U.S. Public Health Service predicts the cost of caring for AIDS patients in the United States reached $16 billion by the end of 1991, accounting for 2.46 percent of the total personal health care cost expenditure, which is projected to be $650 billion.

Furthermore, according to Mark Doherty, director of reasearch at the Society of Actuaries, AIDS claims paid by U.S. insurers during 1990 can be divided into four groups with $283.9 million paid out for individual life insurance claims, $64.5 million for individual claims, $223.6 million in group life claims and $3 18.3 million in group health claims. Seven years ago the CDC estimated that AIDS had cost the U.S. economy about $5.6 billion in medical expense and lost income.

As the crisis wreaks havoc on corporate bottom lines everywhere, Mr. Doherty says that many employers are faced with a grim and dwindling set of options. "One choice is to reprice AIDS coverage, or in a worst-case scenario, discontinue offering the coverage altogether, "he says.

Indeed, many insurers are imposing restrictions on AIDS coverage during policy renewal in the form of outright exclusions or as caps on benefits levels. According to a recent AIDS survey conducted by William M. Mercer Companies Inc., this has, in turn, had repercussions on multinational pooling networks faced with the issue of whether to establish a worldwide policy on AIDS exclusions or follow the practice of local insurers. Consequently, multinational corporations may find that company promises are no longer backed by insurance in some countries.

The survey, which focused on the practices of local insurers, multinational pooling networks and multinational corporations, found, among other things, that AIDS-related illnesses are excluded from one or more of the overseas employee medical, disability and life insurance coverages of at least 23 percent of 135 large U.S. multinational corporations.

Conservative Estimates

"THE FINDINGS are conservative estimates," says Mercer Managing Director Giles Archibald. "Because such exclusions are a common practice in some countries, some insurance coverage may contain provisions of which the employees aren't aware."

Many of the survey companies that were aware of the AIDS exclusions expressed opposition to them, according to the survey, and 27 out of 31 affected companies have a policy of paying some AIDS-related claims not covered by insurers. Other companies reported negotiating waivers with the insurers. …

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