Corporate America's response to the AIDS crisis: what price glory?

• Author: Hodes, Joel L.
• Position: Symposium on Health Care Policy: What Lessons Have We Learned from the AIDS Pandemic?

1. INTRODUCTION

   Corporate America is concerned about AIDS--and it should be.(1) Each year since 1993, AIDS has been the leading cause of death for Americans between the ages of twenty-five and forty-four, and more than fifty percent of America's 126 million workers are in this age group.(2) Stated in more dramatic terms, these statistics mean that AIDS is the leading killer of one half of the American workforce.(3) Without the threat of death posed by HIV infection,(4) these same Americans would have thirty to fifty years to participate in the American workforce or as consumers of corporate products.(5)

   AIDS is a reality in the workplace. One in six American worksites with more than fifty employees has had at least one employee with HIV infection or AIDS.(6) Many employees also have children, spouses, or domestic partners infected with the disease.(7) Even those employees without direct experience with AIDS have been affected by the disease.(8)

   These statistics translate into potentially enormous costs for American corporations and, more broadly, for the American economy.(9) In the purest dollar-based measures, societal costs resulting from HIV/AIDS include direct costs, such as medical and nonmedical costs associated with HIV screening, diagnosis, and counseling, and medical treatment for persons with HIV/AIDS.(10) Other potential costs that are more difficult to measure, but are predicted to increase as HIV/AIDS prevalence rates rise, include "reduction in investment and savings due to higher healthcare expenditures," a "decline in labor productivity [and output] due to worker absenteeism and loss of experienced workers," and adverse "changes in labor market supply and demand."(11)

   American corporations bear a portion of these societal costs while acting in multiple roles: as merchant, employer, philanthropist, and corporate citizen.(12) To date, as the result of the AIDS epidemic, the most threatening expenses faced by American corporations and the most significant responses from American corporations have been in their role as employers.(13) Large American corporations (i.e. firms with more than 100 workers) employ sixty-five percent of the American workforce.(14) America's health insurance system is largely employer-based, so our corporations pay some of the health insurance costs caused by the AIDS crisis.(15) In addition, corporate employers frequently provide health-related benefits, such as short- and long-term disability and life insurance.(16)

   Corporate employers also face numerous other potential costs occasioned by the disease.(17) The costs associated with the hiring and training of replacement workers fall to American employers.(18) Employee productivity and morale can be negatively affected by experiences with the disease.(19) Employers also face rising litigation costs resulting from real and alleged violations of laws prohibiting discriminatory treatment of employees with HIV/AIDS.(20) "AIDS has generated more individual lawsuits across a broad range of health issues than any other disease in [American] history."(21) Furthermore, AIDS threatens to reduce the size of the skilled labor pool in some communities, especially in developing countries.(22)

   AIDS has created a new set of management issues for employers, and has deepened and complicated already existing issues.(23) Employee health and safety concerns, a major issue in some industries, carry new implications because of HIV/AIDS.(24) The most obvious example of this can be found in the health care industry, in which the possibility of blood-borne contamination is probably the greatest.(25) As a result of the AIDS crisis, health care facilities are now required by federal law to implement a blood-borne pathogen standard that covers five million employees nationally.(26) In addition to managing the real safety concerns created by HIV/AIDS, employers must address the hostility and fear experienced by some employees toward their co-workers with HIV/AIDS.(27)

   Employers are now required to comply with federal and state laws--in many instances, new and untested statutes--governing the rights of persons with HIV/AIDS.(28) As part of this effort, employers are attempting to accommodate the special needs of infected employees.(29) In addition, employers face the dual task of appropriately and legally addressing concerns regarding confidentiality of an employee's HIV/AIDS status, while simultaneously ensuring the safety and health of other employees.(30) Establishing and implementing methods and policies with which to address these new management issues requires expenditure of corporate time and money.(31)

   Finally, some corporations have been called upon to contribute financially to community efforts to battle HIV/AIDS, in addition to whatever initiatives they may have undertaken as employers.(32) Corporations working in the health care or pharmaceutical industries have come under considerable pressure to accept a loss in profits in order to make drugs or health care available to persons with AIDS who are otherwise unable to afford such treatment.(33) In addition to these more immediate costs, economists, AIDS advocates, and others warn that American corporations will experience financial losses because of the shrinking markets, both domestically and overseas, that will result from the AIDS crisis.(34)

   American corporations have been barraged by costs--direct, indirect, and speculative--as a result of the AIDS epidemic.(35) Some corporations have taken action to address one or more of these costs.(36) The interesting public policy considerations raised by the pattern of corporate response include not only the particular costs to which corporate America has responded, but also the motivation behind the response.(37)

2. THE CORPORATE RESPONSE TO THE AIDS CRISIS

   Corporations have responded in a variety of ways to the AIDS crisis; for the most part, those responses have been in the corporations' role as employers.(38) The most common response by corporate employers consists of general benefits provided for all employees, including those suffering from HIV/AIDS.(39) In the United States, almost all corporations offer their employees group health insurance, and most of these policies cover HIV/AIDS.(40) Thus, those businesses that cite health insurance benefits as their company's response to HIV/AIDS are usually referring to benefit programs that are already in place and available to employees in general.(41) There may, however, be additional costs to the employer because those benefits are extended to employees suffering from HIV/AIDS.(42) Because of such costs, or the fear of additional costs, approximately five percent of American businesses that provide group health insurance limit or exclude HIV/AIDS from coverage under the health insurance policy they offer to employees.(43)

   Similarly, most large American businesses have developed a general personnel policy that addresses HIV/AIDS, but relatively few have implemented formal HIV/AIDS policy statements.(44) This tendency to incorporate HIV/AIDS policies and benefits into a general policy may reflect a desire to treat HIV/AIDS as another serious illness, rather than as a separate personnel issue.(45) It may also be more cost efficient for employers to implement a single policy or set of benefits that incorporates HIV/AIDS, rather than to implement a special policy to address HIV/AIDS issues.(46)

   A common initiative implemented by corporate employers, and one that is championed by AIDS advocates, is employee HIV/AIDS education.(47) In the United States, one in six large worksites offers AIDS education to its employees; most of these education programs address primarily occupational issues.(48) It is noteworthy that a survey of European, as well as American, corporate employers indicates a much higher percentage of companies have implemented education and training programs specific to HIV/AIDS.(49) Worksites in which employees have potential exposure to blood are much more likely to offer HIV/AIDS education than worksites with little or no exposure.(50)

   Although the variety of workplace programs, taken together, constitute one of corporate America's most typical responses to the AIDS crisis, corporations also have addressed the crisis as philanthropists.(51) In fact, the Centers for Disease Control (CDC) survey of United States businesses found that corporate philanthropy is the single most common way in which businesses are involved with HIV/AIDS.(52) The CDC survey broadly defined philanthropy to include "[f]undraising, [g]rants, [v]olunteerism, [i]n-[k]ind [s]ervices, [s]taff or [f]acilities."(53) According to the CDC, nearly half of all businesses with 100-249 employees participated in such activities, as did 86% of worksites with more than 750 employees.(54) When philanthropy has been defined more narrowly as "corporate contributions," the level of participation has been found to be much lower.(55)

   A narrow segment of corporate America, the pharmaceutical industry, has responded directly to the AIDS crisis by investing in research and development of new drugs to fight AIDS.(56) These pharmaceutical companies are alternately heroes and villains in the AIDS battle; many of them can and do invest enormous sums of money in AIDS drug research, but they generally market these new drugs at very high prices.(57) Drug companies claim that these high prices are necessary to cover the exorbitant cost of testing and marketing the drugs, and to account for the potentially short time frame in which a particular drug remains on the market.(58)

   Some pharmaceutical companies have given away certain drugs, especially expensive experimental drugs, to a limited number of AIDS patients.(59) Glaxo Wellcome offered "to provide thousands of HIV-positive women [in South Africa with access to cheap AZT [to reduce] the risk of their passing the virus to their children."(60) Glaxo proposed to supply the drug to...