happen. But, for individual coverage in small groups, I agree with

you.

If the epidemic continues to spread, we will absolutely have to do something. We will not be able simply to sit back and think about the problem.

Mr. NIELSON. One other point.

Congressman Luken asked you about testing individuals. It was never your intent, even if you planned to test individuals, to go back and test your present policyholders.

Dr. CHAMBERS. Absolutely not.

Mr. NIELSON. The brandnew ones.

Dr. CHAMBERS. That is correct. By their contracts, the present policyholders are guaranteed the amount of insurance for which they applied and which the premiums support.

Mr. NIELSON. Let me ask a question. Congressman Dannemeyer is a very modest individual, but he does have about five legislative initiatives regarding the AIDS proposal, and I may have to jog my memory as to what they are, but one of them allows medical personnel, hospital personnel, to wear protective clothing if they choose to, in dealing with known AIDS victims.

Would you oppose or support that particular one? Any of you. Mr. GOLDBECK. It is certainly my understanding, there may be an exception somewhere, but that is the norm in hospital and medical policies today. Certainly as the purchasers of medical care, the protection of both the provider of care and the patient of care by clothing or other apparatus is an entirely prudent and appropriate thing to do should they desire.

Mr. NIELSON. So you would allow medical personnel to wear special kinds of clothing, you wouldn't object to that?

Mr. GOLDBECK. Certainly not.

Mr. NIELSON. Would you object to requiring isolation of AIDS patients from the other hospital patients in the hospital?

Mr. GOLDBECK. From my knowledge of this, I would say isolation ought to be predicated only upon a medical determination that that is the way to handle the treatment of AIDS and the protection of other people from its potential spread, and I do not see anything that suggests in the literature thus far that that is a necessary step.

Mr. NIELSON. I am going far afield, but let me ask you one more. Do you believe we should isolate the children going to school who are diagnosed as having AIDS, isolate the children who have AIDS from other children?

Mr. WAXMAN. Will the gentleman yield?

These are insurance people, not public——

Mr. NIELSON. I admit I was going far afield. I just wanted to know how far their nondiscrimination is going to take. That is why I was asking the question. I will withdraw the question at the chairman's request. It is an interesting question. It is causing a lot of concern in some of the schools over the country.

Mr. DANNEMEYER. Mr. Chairman, I think these witnesses are just chafing at the bit for the opportunity to answer that question. I think they should be asked as citizens of this country to answer that question if they want to.

Mr. WAXMAN. Mr. Nielson has been recognized to ask questions. If he wants to pursue it, he may pursue it.

Mr. NIELSON. I withdraw the question, but think about it in terms of how you handle this. It is a very difficult problem.

Mr. WAXMAN. It is a difficult problem, and let me say from my perspective that we have to be prepared to take any steps that will legitimately stop the spread of this disease. It has got to be our highest priority, and I am sure everyone, every citizen, would agree, every person would be equally concerned about it, and we are interested in hearing ways to stop the spread of the disease, and that will be the subject of other hearings, I am sure that we will have as we have in the past. This one is on the question of how are we going to pay for the health care of those who are undoubtedly going to have the disease.

Mr. Nielson, have you finished?

Mr. NIELSON. I just simply mention there are five such bills coming. I just outlined three of them from what I know about, and there are two others that I am not too familiar with, but we are likely to have a number of bills involving this, and while they may not impact on the insurance industry directly, I think they impact on the spread of AIDS and the fear of AIDS since it is rampant in the country, and it may influence what you do in insurance, so you should be aware of them.

Thank you, Mr. Chairman.

Mr. WAXMAN. Thank you very much for being with us. Your testimony has been very helpful.

We are now going to break for an hour and then come back and finish the hearing. We will convene at 2 o'clock. We would like to ask you to respond to-Dr. Chambers, Ms. Lehnhard, and Mr. Goldbeck-we would like you to respond to questions for the record. There are some questions we would like to have the answers to. Mr. WAXMAN. We will reconvene in this room at 2 o'clock. [Whereupon, at 1:05 p.m., the subcommittee recessed, to reconvene at 2 p.m., the same day.]

AFTER RECESS

Mr. WAXMAN. The subcommittee will come to order.

I call forward now Councilman Wachs, councilman for the city of Los Angeles; Brent Nance, CLU, AIDS Project LA, CIPHR.

Please come forward, gentlemen, and take your sets at the table. We want to welcome both of you to our hearing today. As I indicated to the other witnesses, I regret the delays in getting to your testimony. We have had on the floor of the House probably one of the most important items that we will have in this Congress, what has been known as the Gramm-Rudman proposal, to set in motion very deep cuts in health care and other programs the Federal Government sponsors.

So it is appropriate to have this discussion at the same time. I apologize for the delay, and we are looking forward to hearing your testimony.

I would like to request you to summarize your testimony in no more than 5 minutes, and we will make the full text of your statement part of the record. Let's hear from Councilman Wachs first.

STATEMENTS OF JOEL WACHS, COUNCILMAN, CITY OF LOS ANGELES; AND BRENT O. NANCE, CLU, AIDS PROJECT OF LOS ANGELES, LA, CONCERNED INSURANCE PROFESSIONALS FOR HUMAN RIGHTS

Mr. WACHS. Thank you.

Three months ago, LA made history by becoming the first city in the United States to prohibit discrimination against people with AIDS. And I am happy to report that from all indications, our historic new law is working.

Because of this landmark legislation, it is now illegal to discriminate against any person with AIDS, or an AIDS related condition, in employment practices, rental housing, business establishments, city services, private health care facilities, and educational institutions.

This law is not just a legal document, but also Los Angeles' promise that those who face their most profound moment of loss will not be shunned aside because of ignorance, bigotry or fear.

We ask that these protections be extended nationally. For not only does discrimination strip an innocent person of his basic dignity and rights, but it has a direct negative impact on the issues you are examining this morning: namely, the excalating costs of AIDS, and the manner in which those costs will be borne.

The shifting of costs from private insurance programs to Federal and local governments is directly related to discriminatory practices. When one loses his job, or is otherwise denied insurance, the ultimate cost will be borne by the public.

Employers must be prohibited from acting out of fear, and firing capable employees because of what other employees or customers might say.

Insurers should not be permitted to refuse coverage through use of HTLV-III antibody testing or through lifestyle screening which could potentially deny coverage to all single men between 19 and 50.

For lifestyle screening-which by the way Lincoln advocatesraises the most serious of legal and ethical questions, and denies people their most cherished of all rights-that of their privacy.

And the use of antibody testing for insurability will not only shift the medical costs of AIDS to the public, but will have other serious consequences as well: It will deny coverage to millions who may never be diagnosed with AIDS; it will hinder needed research studies; and it will punish the very public which is intended to benefit from medical research.

Indeed, the use of any newly discovered early warning test as a screening_mechanism for insurability could have sweeping repercussions. It could set a dangerous precedent-that every step forward by medical science will be accompanied by two steps backward by the insurance industry. And the very people meant to be helped by medical technology will find themselves unexpected victims of insurance industry discrimination.

Furthermore, discrimination actually increases the cost of medical care as well as shifting it. If nursing homes refuse care for people with AIDS, the result is needlessly prolonged stays in expensive hospitals.

We cannot permit discriminatory practices which unnecessarily increase costs, or cause large shifts in responsibility from the private sector to the public.

We must continue to look to private insurers to maintain their traditional role as primary providers.

There must be protections against arbitrary discrimination which denies life and health insurance policies to broad classes of people.

Use of HTLV-III antibody testing and lifestyle screening-already illegal in California-must be prohibited nationally.

Employees with AIDS must be considered as any other medical problem, with attendant health insurance, absence and disability, and the protection of privacy.

If a person does lose his job, we must provide portability, either by mandatory portability clauses or by use of Medicaid to pay the premiums needed to continue coverage.

Even with these protections, private insurance benefits will not always be available to all who need them. In such cases, we must look to changes in Medicaid to help fill the gap.

Eligibility criteria should be reexamined, with respect to waiting periods and resource qualifications. Reimbursement for experimental drug therapies, psychotherapy, and matrix care programs should also be given urgent priority.

Mr. Chairman, members of the committee, you don't have to have AIDS to care about someone who does. All it takes is a little human decency.

I commend you personally for your leadership in this most extraordinary national crisis.

I think it is incumbent upon all of us to throw aside our prejudices, and join together in an all-out war on the AIDS virus, rather than its victims.

Thank you.

Mr. WAXMAN. Thank you very much, Mr. Wachs.

Mr. Nance.

STATEMENT OF BRENT O. NANCE

Mr. NANCE. Mr. Chairperson, thank you.

Never before has a disease caused such widespread panic and fear with the public, the insurance industry and health-care workers as has AIDS. High medical costs, fear of the unknown and the CDC's insistence of labeling this epidemic as a disease of gays and other less desirable populations have all contributed to this sorry state of affairs.

AIDS is the largest health care problem this Nation has faced since polio. Unlike the response during the past epidemic, governments, insurance companies, HMO's, and various conservatives are coming out to abdicate their responsibility in addressing AIDS.

The hard facts are that the costs of AIDS; in suffering, death, dollars and productive years lost, will continue to mount to higher levels and will be borne by us all.

Insurance companies are considering ways to reduce, avoid, eliminate and reject their normal responsibility for the treatment and financing of AIDS costs. Screening of applicants for HTLV III/

LAV, excluding coverage for AIDS and redlining in certain States has been widely discussed.

Instead of adding to the current crisis these groups should become part of the solution. Instead of looking for ways to avoid all AIDS claims they should be supporting lower, more cost-effective methods of health care. Instead of redlining employers in cities with high AIDS claims, they should be looking to provide coverage including adequate extension of benefits clauses and reasonably priced conversion policies.

The group insurance industry already uses a pre-existing condition clause in group contracts that allows them the protection of not paying claims for any illness that existed prior to the effective date of coverage. The use of this clause allows the industry to avoid paying claims for people who were sick prior to their coverage.

HMO's need to consider similar positive responses. HMO's have been slow to address AIDS from a health care basis. This cannot continue. Many are not equipped nor properly trained to handle the medical needs of AIDS patients. Even so, they almost always refuse to refer their patients to adequate outside medical care.

ERISA plans are virtually unregulated and can and do almost anything they wish with benefits. Conversion policies and disability extensions are not mandated. They currently have the ability to exclude AIDS from coverage.

All public health care is provided through either Medicaid or Medicare. The California State AIDS Advisory Task Force estimates that in California about 61 percent of all AIDS patients will end up on MediCal. Numerous and serious problems have occurred. The majority of these problems occur because of inability to qualify, the high copayment costs, and high monthly deductibles, and the low level of reimbursement for AIDS claims.

The burden of care under our system falls upon county hospitals, and public nonprofit hospitals. Overutilized, overcrowded and underfinanced facilities are already reaching their breaking point. The burden falling upon these overtaxed systems will further increase if the insurance industry succeeds in limiting its obligations. The insurance industry, HMO's and ERISA will have to take part in financing the financial burden of providing health insurance coverage. Laws may have to be passed preventing them from excluding AIDS, from requiring special blood tests and from redlining.

Because regulators are either unwilling or unable to regulate the industry with regard to AIDS coverage, the Federal Government may have to address the areas of mandating adequate and affordable conversion policies, adequate disability extensions, coverage during unemployment, layoffs or termination. Full takeover of benefits when employers change from one carrier to another must be provided.

The insurance industry must provide alternative lower cost health care approaches, provide public risk reduction and avoid

ance.

AIDS Project Los Angeles, Shanti San Francisco, and the Gay Mens Health Crisis New York and other organizations have saved insurance and public health systems millions of dollars in health care claims by providing care for AIDS patients in their homes.