“rating bands”2 to limit the size of premium increases.3 Some states have also chosen to purchase new policies for people with HIV, using CARE Act funds or other programs that target low-income or uninsured people. Other features of private insurance plans that pose problems for individuals with HIV/AIDS are the annual or lifetime caps on benefits, copayments, and deductibles, and limits on services. Finally, the insurance market and insurance reforms vary significantly by state, thus presenting different options and limitations across the country (Kates, 2004; Levi et al., 1999). Results from the HIV Cost and Services Utilization Study (HCSUS), for example, indicate that private insurance coverage for HIV varied substantially by region. In the West, 51 percent of HIV patients had private insurance coverage, compared with only 19 percent in the Northeast (Shapiro et al., 1999).

HIPAA protections do not improve access to the individual market for those without prior group coverage. Many individual health insurance applications, for example, ask questions about HIV diagnoses, treatment, or medication for AIDS; other immunological deficiency disorders; and whether the individual has ever had a positive test for HIV antibodies. Most carriers in the individual market generally consider HIV/AIDS an “uninsurable” condition, and applications for coverage are routinely denied (Kates, 2004). Texas insurance law, for example, now allows state-regulated insurers to exclude or deny coverage or cancel a policy based on a diagnosis of AIDS, HIV, or HIV-related illness. If other states follow suit, federal programs such as Medicaid and the CARE Act could play an even more important role as a safety net insurer.4

As their illness progresses, individuals with HIV often face difficulties maintaining coverage if they become unemployed due to illness. The Health Insurance Program (HIP) under Title II of the CARE Act provides funding for health insurance coverage for people with HIV disease by purchasing insurance services or by extending an individual’s existing health insurance coverage. This program, added under a provision to the CARE Act in 1996,


Rating bands are restrictions placed on the variation in premiums.


The impact of these strategies is controversial; conventional wisdom suggests that community rating actually reduces insurance coverage because young healthy consumers react to the higher premiums (than expected for their risk status) by dropping coverage and thus stimulating further increases in premiums. A study by Buchmueller and DiNardo (1999) examined the effect of community rating by contrasting the different reform approaches in three states: New York with pure community rating, Connecticut with moderate restrictions on insurer premiums, and Pennsylvania with no reform. The study found no evidence that community rating leads to adverse selection and dropping of coverage, but did see evidence of marked shift away from indemnity insurance toward HMOs.


Texas Consumer Choice of Benefits Health Insurance Plan Act, Health Maintenance Organizations. SB541, Legislative Session 78 (R).

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