Los Angeles Times - Thursday April 16, 1992
Victor F. Zonana; Times Staff Writer

Aetna Life & Casualty Inc. was refusing to pay for a costly drug that had been prescribed for one of Baker's AIDS-patient clients, and the home health care company that had been supplying the drug on credit was threatening to cut off the patient's supply.

"Aetna was claiming the drug was 'experimental or investigational' in May, 1991, even though we'd sent them articles from as far back as 1987 from the New England Journal of Medicine and other journals affirming the treatment's effectiveness," Baker said.

Aetna liberalized its coverage for the drug, neupogen, last August. "We do attempt to be reasonable with people who are terminally ill," said Katharine Worthington, manager of coverage policy for Aetna's group health plans.

"I agree that people shouldn't have to fight with their insurance companies," Worthington added. "But people should also recognize that we can't just rely on the word of their doctors. We try to do the best we can."

The episode is important, advocates for AIDS patients say, not because Aetna is any worse than other insurers when dealing with acquired immune deficiency syndrome and HIV, the virus that causes it. What makes the case notable now was last week's announcement that a member of Aetna's board of directors, former tennis star Arthur Ashe, has AIDS.

Ashe's disclosure casts a spotlight on the health insurance industry at a time when the nation's health care financing system is under unprecedented scrutiny and attack. And the treatment of AIDS and HIV patients is part of that bigger argument.

The insurance industry, which has seen the number of AIDS claims rise sharply in recent years, has been criticized for several controversial policies, including capping benefits for AIDS-related ailments, denying coverage to members of group plans if they had an illness at the time they joined the plan, and refusing to pay for non-sanctioned AIDS drugs.

Ashe, in a statement released this week, portrayed Aetna as one of the more enlightened companies in the industry. Indeed, in many respects Aetna's response to the epidemic has been far more humane than that of other insurers. The company has donated $2.35 million to various AIDS groups over the past five years and won the McKinney Foundation's Leadership Award for its AIDS efforts in 1990.

In his statement, Ashe noted that Aetna "will not sell or administer any health plan that singles out AIDS for limitations, caps and exclusions." Such caps and exclusions are a growing concern for people infected with HIV, or human immunodeficiency virus, and are the subject of litigation across the country.

In other instances, health insurers such as HealthAmerica Corp., Guardian Life Insurance Corp. and the Great Republic Insurance Co. have been caught "redlining" entire neighborhoods and professions in order to avoid issuing coverage for gay men.

Aetna, on the other hand, worked with National Gay Rights Advocates in 1985 and 1986 to devise underwriting guidelines that preclude discrimination based on sexual orientation, said Linda Ambrose, the company's director of corporate media relations.

"Obviously, Aetna is distancing itself from the bad people on the block, and I'm sure Mr. Ashe has been treated decently," said Mark Scherzer, a New York attorney who specializes in HIV and health insurance and has written many scholarly articles on the subject.

But Aetna, as well as other insurers, use a pre-existing condition exclusion to deny coverage to members of group plans if they had an illness at the time they joined the plan. They also often refuse to reimburse patients for drugs not yet approved by the government.

"I also assume that Mr. Ashe had no problem with (Aetna's) pre-existing condition exclusion," Scherzer added. "I assume that he has not sought reimbursement for drugs not yet fully approved by the Food and Drug Administration."

Ashe himself acknowledged in his statement that, "if anyone can be described as such, I am a lucky AIDS patient. I do not want for medicine, doctors, family support or personal initiative." Many others, he noted, "are not so lucky."

Jude Payne, a policy analyst at the Health Insurance Assn. of America, an industry lobbying group, said Aetna's "is a very respectable board for Arthur Ashe to sit on." She said the health insurance industry is unfairly bearing the brunt of criticism in its handling of AIDS when it is the entire health care financing system that is at fault.

Critics of the industry agree--to a point. "The fault does lie with the health care system as a whole, but that doesn't excuse the insurers, who are an integral part of the system," Scherzer said. "The industry cannot be excused for putting obstacles in the path of sick and dying people."

Aetna "may be the best of a bad lot, but it's a really bad lot," added Thomas B. Stoddard, a civil rights attorney who has petititioned the Supreme Court to review a case in which a Houston retailer slashed lifetime benefits for AIDS to $5,000 after employee Jack McGann was hospitalized with AIDS-related pneumonia.

Two lower courts have ruled that the reduction in benefits was legal because the employer, H & H Music Co., terminated its insurance contract with the General American Life Insurance Co. and instituted a self-insured plan. In such cases, an employer agrees to pick up the tab for its workers' covered health care expenses. Under traditional insurance plans, an insurance company collects premiums and assumes the risk.

The H & H case illustrates what AIDS patient advocates say is an ominous trend for people covered by self-insured group health plans. "Many insurance companies now make money by administering self-insured plans, rather than assuming risks," Stoddard said.

"The problem is that these 'wildcat' health plans are unregulated by the federal government and unregulatable by state governments," Stoddard added. "As the law now stands, employers can play with their health plans to their heart's delight, and it's a scandal."

About 52% of people covered by group plans are members of self-insured plans, up from just 5% in 1973.

Health insurance industry lobbyist Payne said AIDS patients whose coverage is slashed may ultimately prevail in court under the newly enacted Americans With Disabilities Act, which prohibits discrimination against people with AIDS and HIV. But Stoddard said the law is ambiguous and, with an increasingly conservative judiciary, a victory is not guaranteed.

Payne also said she advises administrators of self-insured plans whose clients want to institute AIDS caps that "we don't see a need for employers to treat AIDS differently" in providing coverage.

AIDS-Related Claims Rise

Estimated AIDS-related claims paid by the life and health insurance industry have increased fourfold from 1986 to 1990, according to a survey of 321 companies by the Health Insurance Assn. of America. The estimate does not include payouts under self-insured plans. Total Claims (in millions of dollars) 1986: $292.2 million 1990: $1, 182.3 million

Areas of Conflict

There are three major areas of conflict between health insurers and AIDS / HIV patients:

Arbitary Caps: Some companies will self-insured health plans are limiting lifetime benefits for AIDS and HIV-related illnesses to $5,000 or $10,000, with no comparable restrictions on other costly illnesses. Prescription

Reimbursement: Some insurers refuse to pay for drugs prescribed by doctors unless their use for specific AIDS conditions have been approved by the Food and Drug Administration.

Redlining: Some insurers attempt to screen out gay male applicants, using such criteria as ZIP codes, martial status and occupation, to guess at an applicant's sexual orientation. Sources: Health Insurance Assn. of America and Mark H. Jackson in "Health Insurance: The Battle Over Limits on Coverage."

CAPTION: Chart: AIDS-Related Claims Rise, PATRICIA MITCHELL / Los Angeles Times Chart: COLOR, (Orange County Edition) AIDS-Related Claims Rise, PATRICIA MITCHELL / Los Angeles Times Photo: Attorney Mark Scherzer specializes in HIV and insurance. Photo: COLOR, (Orange County Edition) Attorney Mark Scherzer specializes in HIV and insurance. JOE TABACCA / For The Times

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