AIDS and Insurance coverage and insurance underwriting and HIV testing

Our discussion of the Waxse case on 1/19, where the Kansas Supreme Court overturned a lower court's ruling and held that Mr. Behnke's less than fully honest answers in his medical insurance application didn't rise to the level of fraud on the insurer and hence would not invalidate his coverage, made me think further about the issue of what insurers can ask you on your health/life insurance application. Because insurance coverage is almost exclusively an issue of state law, there is no "universal" answer to the following questions. However, the following states the "probable" law in most jurisdictions. The best way to find out what each state requires, short of combing their statutes, is to look at the various state Department of Insurance web sites. Many have posted brochures or information on the subject.

Turning Down the Emotional Heat on AIDS

There is a preliminary observation that needs to be made because of dramatic coverage of AIDS in the media over the last two decades. Although AIDS is a terrible and ravishing disease, from an insurance perspective it is just like any other terrible and potentially fatal disease, such as heart disease. Thus, just as no one would have problems with being asked in a medical questionnaire if someone in your family tree or you have suffered shortness of breath, blackouts or other symptoms that might make your susceptibility to a heart attack or stroke higher, so insurers try to frame the AIDS issue in the same way. But because of the highly charged emotional overtones of the AIDS issue (and some would want to inject a moral element into the debate--that only gays get this disease because of a "bad" lifestyle-, a point that I think is not only irrelevant but demonstrably false), it has taken a while to "sort out" the issue of what insurers can ask with respect to AIDS-related questions.

Going Through the Questions

In general, this is the law in a majority of jurisdictions today. First, insurers may ask if you have ever been diagnosed with AIDS or ARC (AIDS-related complex). Second, insurers may or may not be able to ask you if you have been tested for AIDS, ARC or HIV virus. In an individual health or life insurance plan, you can be asked about it, but you probably can't be asked about it if you are in a group of insureds through your place of employment. The distinction is that the latter situation should put you in a large enough "pool" so that the good and bad health of the employees will mirror the general health of the greater population. For an individual policy the insurer may require you to be tested, but it will be at the insurer's expense.

Third, if an insurer requires an individual to take such a test, it can only require a test that reveals the presence of HIV. It is not a "fishing expedition" for the insurer to try to find out everything that might be "wrong" with you. As the Wisconsin Insurance Department says, " Insurers may ask you about or require you to take tests that that state epidemiologist finds are 'medically significant and sufficiently reliable to detect the presence of HIV..." Informed consent is required before testing.

Fourth, insurers may share the results of your test with other insurers based normally on what the consent form says. That is, insurers have an interest in protecting themselves, and so will want to have a "bank" of data on you that other insurers can tap into in the future. However, many individuals would prefer that their medical history, especially on highly sensitive issues (such as HIV testing and results) not be so readily available. If you are advising clients, be sure to read what the person is consenting to in taking the test.

Fifth, if a person tests positive under the conditions laid out above, the insurer may deny coverage but can only do so if it gives written reasons for so doing. It is enough if the insurer says that you/your client does not meet the underwriting criteria for coverage.

Sixth, as we saw in the Waxse case, temptations for misrepresentation or not complete honesty are prevalent when people have a great need for insurance. This, of course, is nothing other than an illustration of the adverse selection principle you have already read about. But most courts would agree with the Waxse court, that in order for an insurer to be able to rescind coverage, the burden is on the insurer to show fraudulent conduct in answering the questions and not simply mistake or unintentional misrepresentation. This is a rather high bar to overcome for insurers, but the social policy seems to be that insurers are in the position to know how to ask the questions they want to have answered (after all, they can hire a battery of lawyers who get paid a lot to know how to ask good questions), and if they do not, the burden shouldn't be placed on the insured to "help them out."

Conclusion

In his book on Understanding Insurance Law, Robert Jerry points out that despite all the concern about whether AIDS-sufferers can get health coverage, the fact is that they will all get medical services. That is, people with AIDS are not simply going to die untreated in the USA. They will find a way to get services, even if they have no or inadequate insurance coverage. And this point means that someone will have to pay for it--whether it is the hospitals and doctors who "write off" losses, or the insurance companies who insurer or you and me as part of the general costs we pay for our health care. Thus, in the final analysis, the social issue is probably best presented as one of "who pays" rather than "is there coverage for the sufferer?" Yet, the insurance law dimensions of it are important for our consideration.