South Africa’s AIDS Epidemic Leading to Higher Insurance Premiums, Reduced Coverage

The AIDS epidemic in South Africa is leading to higher insurance premiums and reduced benefits, the New York Times reports (Itano, New York Times, 12/17). About 25% of South Africa's economically active individuals are HIV-positive, with about five million total HIV cases in the country (Kaiser Daily HIV/AIDS Report, 10/6). Although South Africans who are covered by life and health insurance policies tend to be wealthy and white -- the segment of the population least affected by the epidemic -- the impact of the disease has been increasingly felt by the insurance industry, the Times reports. This is especially true for companies that offer employer-provided group health and life insurance, which generally cover all employees regardless of their health status, according to the Times. Metropolitan Life, one of the first South African insurance companies to study the AIDS issue, has said that unless antiretroviral treatment -- which is viewed as a "cost-effective" means of addressing the epidemic -- becomes more widespread, the cost of providing health, life, funeral and disability insurance could double between 2000 and 2005 and triple by 2010, when the number of AIDS-related deaths in the country is expected to peak. Companies that offer individual insurance policies have protected themselves from HIV-related costs by issuing policies primarily to HIV-negative people, and an increasing number are requiring follow-up HIV-tests to retain coverage. Although the South African government prohibits insurance discrimination based on health status, the companies can cap coverage, increase premiums or introduce mandatory waiting periods before coverage takes effect. According to a study conducted by FinMark Trust, one in six people in South Africa has medical insurance and one in five people has ever had life insurance. In addition, the survey found that 3.8 million South Africans say they no longer have medical, life, disability or other insurance.

Antiretroviral Drugs
The rollout of a national care and treatment program that includes the provision of antiretroviral drugs is expected to make the "most difference" in improving the insurance problem, according to the Times (New York Times, 12/17). The national program aims to treat 1.2 million people -- or about 25% of the country's HIV-positive population -- by 2008 (Kaiser Daily HIV/AIDS Report, 11/20). "We've modeled it over a number of years, and even with a high degree of [treatment] failure, you still save money," Stephen Kramer, head of the HIV/AIDS research unit at Metropolitan Life, said. However, it will be years before the full effects of the national treatment program are felt, and the government is dealing with the "sticky issue" of wanting to expand access to insurance without bankrupting employers and insurance companies, according to the Times. In the meantime, the insurance industry has considered several options, including a plan that would require new homeowners to buy a life insurance policy worth up to $18,700, which in effect would make HIV-negative people subsidize the insurance rates for HIV-positive people. Still, many insurers see widespread treatment as the best long-term solution to the problem. "The better they know it and the better the treatment, it could become a normal insurable condition," Gerhard Joubert, executive director of the Life Offices' Association, said (New York Times, 12/17).

Program Implementation
The implementation of South Africa's national HIV/AIDS care and treatment program is expected to be "closely monitored to ensure that it does not run into the stumbling blocks and controversies which have dogged its predecessors" -- the mother-to-child HIV prevention program and the HIV prevention program for rape survivors, Health-e News reports in the last of its 2003 "Living with AIDS" series (Bodibe, Health-e News, 12/12). The South African Cabinet last month approved a plan for a national HIV/AIDS treatment program, including the distribution of free antiretroviral drugs through service points in every health district within one year and in every local municipality within five years. The program aims to treat 1.2 million people -- or about 25% of the country's HIV-positive population -- by 2008 (Kaiser Daily HIV/AIDS Report, 12/11). Although the onus for implementing the program appears to lie with the provincial health departments, "the hands-on involvement of the national [health] department cannot be over-emphasized," according to Health-e News. A complete transcript and audio version of the story -- which includes interviews with Dr. Nono Simelela, director of the TB, STIs and HIV/AIDS Directorate in the Department of Health, and Dr. David Spencer, an HIV physician who practices in Johannesburg -- is available online (Health-e News, 12/12).