The Times Mirror Company; Los Angeles Times April 14, 1994, Thursday, Home Edition SECTION: BUSINESS; PAGE: D-1
David R. Olmos and Stuart Silverstein; Times Staff Writers

Paul Farnham, a Georgia State University health economist who was a co-author of the study, said many employers have been misled by estimates of medical costs related to HIV and AIDS. The purpose of the study was to develop an economic model for estimating "the expected costs that a typical large company would incur over a five-year period."

Federal researchers have pegged the average lifetime medical bill of a person with the human immunodeficiency virus at between $85,000 and about $120,000. But Farnham contends that some employers familiar with the estimates mistakenly believe they will bear most of that cost.

"There's this perception that AIDS is completely different, much more expensive and has a much greater economic impact" than other catastrophic illnesses, Farnham said. Compared to diseases such as cancer, acquired immune deficiency syndrome "is in the low mid-range in terms of overall costs to society," she said.

The report, in part, was aimed at employers who have cut off benefits or fired workers with the AIDS virus--a theme portrayed in the movie "Philadelphia," in which Tom Hanks portrays a lawyer who is fired after his firm learns he has the AIDS virus. Although they are protected under the federal Americans With Disabilities Act, AIDS groups say workers often face discrimination on the job.

In one widely cited case, a Houston music store slashed its medical coverage for AIDS after one of its employees developed AIDS-related pneumonia--in effect, cutting off his benefits.

W. Shepherd Smith Jr., executive director of the Washington-based Americans for a Sound AIDS/HIV Policy, said small businesses tend to have the greatest concerns about the impact of AIDS on their workplaces. They often have skimpier medical coverage and may risk cancellation of their insurance policies or huge premium increases if an employee develops a serious illness.

The findings were the result of three years of research Farnham undertook with co-author Robin Gorsky, an associate professor at the University of New Hampshire's School of Health and Human Services. The study was done under the auspices of the Centers for Disease Control and Prevention in Atlanta.

The report was warmly received by AIDS education advocates.

"It dispels some of the myths about HIV, including the idea that it is a bottomless pit of costs for employers," said Patrick May, a spokesman for the National Leadership Coalition on AIDS, an education group backed by business and labor.

Fred J. Hellinger, a leading AIDS health care expert for the federal government, has estimated that the medical costs of treating someone infected with HIV averages $119,000, taking into account the entire period from the time the virus is contracted until the patient dies.

But Hellinger backed the findings of the study. He said most of the medical costs are picked up not by employers, but by taxpayers. He explained that the highest medical expenses come in the last months of the patient's life, usually after the patient has left work and is no longer covered by the company's insurance.

"It's a manageable problem for most employers," Hellinger said. "It's a public burden at the end."

Others, however, contended that many employers continue to incur significant costs in the form of premiums for medical and disability coverage of employees in the late stages of AIDS.

James A. Klein, executive director of the Assn. of Private Pension and Welfare Plans, an employer trade group, said the costs to employers may be understated in the report because of the time period it covered.

Experts noted that two-thirds of the HIV-infected workers in the study had not yet developed full AIDS. The study tracked workers over a five-year period, ending between nine and 10 years after they contracted the AIDS virus. Federal authorities say most people with HIV, on average, don't develop full AIDS until 10 years after they become infected with the virus.

In another recent study, researchers in San Francisco reported that people with the AIDS virus are living about a year longer than those who were infected a decade ago, largely because of successful treatment of AIDS-related pneumonia.

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