SOUTH AFRICA: AIDS Costs in South Africa Are Rising

Important note: Information in this article was accurate in 2003. The state of the art may have changed since the publication date.

SOUTH AFRICA: AIDS Costs in South Africa Are Rising

New York Times (12.17.03) - Friday, December 19, 2003
Nicole Itano

South Africa's insurance industry must adjust to a business climate in which 5 million people - 12 percent of the total population, and 20 percent of adults - have HIV/AIDS. A November study by Finmark Trust found 3.8 million South Africans who said they no longer had medical, life, disability or other insurance. Employer-provided group health and life plans, especially for companies with a blue-collar work force, have felt the pinch as HIV-related premium costs increase.

Improved access to treatment could change things significantly. An increasing number of employers like AngloGold and DeBeers offer antiretrovirals to their employees under their health insurance plans. But the rollout of the national treatment program is expected to have the most effect.

"Treatment is now being regarded as a cost-effective option," said Stephen Kramer, head of the HIV/AIDS research unit at Metropolitan Life. "Even with a high degree of failure, you still save money," he said.

Still, HIV/AIDS remains a challenge for the insurance industry and an issue for South Africa's government, which wants to expand services without bankrupting employers or insurance companies. Experts say unless ARV treatment becomes widespread, the situation will worsen. According to Metropolitan's HIV/AIDS unit, the cost of employee benefits - life, health, disability and funeral plans - will double from 2000 to 2005. By 2010, when AIDS deaths are expected to peak, the cost will triple 2000 levels.

"The scary thing for employees is that it's forcing many of them to opt out of benefits because they're becoming unaffordable," said Chris Barker, managing partner of FutureForesight consulting firm.

While medical insurance premiums are rising for several reasons including new laws requiring companies to cover various expensive diseases, experts say life, disability and funeral benefits costs are rising almost entirely due to HIV/AIDS.

In the long run, insurers hope widespread access to ARV treatment will turn HIV/AIDS into a long-term chronic illness. "The better they know it and the better the treatment," said Gerhard Joubert of the Life Offices' Association, "it could become a normal insurable condition."
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