Statement by Peter S. Arno, Ph.D. Chairman Waxman and members of the Subcommittee, I am Peter Arno, an economist and Pew Postdoctoral Research Fellow at the Institute for Health Policy Studies and the Aging Health Policy Center at the University of California, San Francisco, and I here in response to the Subcommittee's request to discuss related to health policy and the cost of AIDS. am issues than Despite medical breakthroughs in isolating and describing fundamental the probable causative agent in AIDS and some basic advances in immunology and virology, vaccine development and control of the AIDS epidemic appear to be years away. The number of reported cases of AIDS in the United States continues to more double every year since the disease was first diagnosed in 1981. According to recent data from the Centers for Disease Control (CDC), a total of 11,352 cases of AIDS have been reported as of July 1, 1985. 5,683 of these people have died. If present trends continue, an additional 40,000 cases can be expected over the next two years (Quinn, 1985). It is likely that the AIDS epidemic will place increasingly greater strains upon the health care system in cities and counties with a large number of cases of AIDS, as well as on both public and private sources of health care financing. The problem will intensify as the epidemic continues to grow, particularly in high-incidence areas such as New York, San Francisco, Los Angeles and Miami, which together account for approximately 60 percent of the nation's total reported absolute' number of AIDS cases cases. In addition, while the continues to grow in high-incidence metropolitan areas, there is convincing evidence that it is spreading geographically across the country. According to the CDC, the four cities mentioned above accounted for 73.2 percent of all reported AIDS cases in September of 1982; this figure declined to 65 percent by September of 1983, and by July of 1985 their proportion of the nation's total had fallen to 56.6 percent. In other words, the proportion of total AIDS cases reported in the United States not in these four metropolitan areas has increased by more than 60 percent during this time period. There are now AIDS cases reported in at least 46 states, Washington, D.C., Puerto Rico and the Virgin Islands. There is little room to doubt that AIDS is a national public health emergency. seriousness Despite the of the AIDS epidemic and its exponential spread throughout the nation, information and published data on the costs of treatment of AIDS patients is practically non-existent. In the literature, two cost estimates The first, published in the Annals of have been reported. Internal Medicine in August 1983 by Groopman and Detsky, estimates the cost of treatment at between $50,000 and $100,000 per patient. However, the basis of this estimate is not stated, nor are the figures broken down in further detail. A more recent estimate was published in the February 21, 1985 issue of the New England Journal of Medicine by Landesman, Ginzburg and Weiss. They estimate the average direct lifetime cost of an AIDS patient to be $42,000. However, this figure is based on a study of 16 patients; as we all know, a comprehensive cost analysis requires a far larger sample size. in In a preliminary cost analysis of the first 9000 AIDS cases the United States, Hardy and her associates at the Centers for Disease Control, U.S. Public Health Service, estimated a cost of $140,000 per patient. The hospital costs were calculated by multiplying the total number of hospital days by the average daily charge for AIDS patients. The average length of stay was estimated from three studies: O An average length of stay of 12 days was found in a hospitalized patients in San Francisco survey of 416 between July 1984 and January 1985 in 13 acute care hospitals; o a study of 100 AIDS patients in New York City during a о one-week days; period found an average length of stay of 50 an ongoing study in Philadelphia found an average length of stay of 31 days for 16 AIDS patients who died during their initial hospitalization. The average length of hospital stay for the 9000 AIDS cases nationwide was estimated to be 31 days. The cost of care was then estimated, using the average charge of $853 per day found in two San Francisco hospitals. The result was a figure of $1.25 billion nationwide. All of the costs hospitals discussed above are for inpatient stays at only. They do not reflect the cost of outpatient visits to private physicians or clinics or the array of social support and counseling services that are provided largely through the voluntary non-profit sector. (We are in the process of assessing these costs and will report on them in the future.) Furthermore, an often neglected dimension of the economic impact of illness on society is the indirect costs associated with the to society's production of loss of one's social contribution goods and services. This is particularly severe in the case of AIDS because most victims are struck down in the prime of their life. In Hardy's study, the indirect costs of AIDS were measured in terms of work years lost due to disability and premature death. For the first 9,000 cases of AIDS it was approximately 7,538 years of work due to disability estimated that were lost at a cost of 162 million dollars as well as 4.2 billion dollars in future earnings due to premature death. Thus, in total, more than 4.3 billion dollars have been lost in indirect costs (Hardy et al., 1985). While these figures are quite rough they do indicate the magnitude of the indirect economic loss due to the AIDS epidemic. The data that I would like to report today was gathered and analyzed in a study done under the direction of Anne Scitovsky of the Palo Alto Medical Policy Studies of the Foundation University and the Institute for Health of California, San Francisco, with Mary Cline, Philip Lee and myself.. I will present the preliminary findings from Our detailed study on the inpatient treatment of AIDS some of cost of patients at San Francisco General Francisco's AIDS patients are treated. We secured data on charges for 311 out of 330 admission of AIDS patients to SFGH during the period January through September 1984. The data include charges for hospital services and professional fees for surgical and anesthetist services. data on professional The fees came from the final bills while the data on hospital charges came from the discharge summary bills which are not necessarily the final bills. However, we believe that Our data understate actual charges by no more than five percent. The following summarizes our findings to date: 1) The average charge per admission, including professional charge was $6,849. The admission was $1,455 or |