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The Economic Cost of AIDS

October 13, 1995|JENNIFER OLDHAM

By 2000, the total cost to the global economy of the AIDS pandemic could reach $514 billion and, in the worst-case scenario, rob the world of 1.4% of its gross domestic product--the equivalent of wiping out the economy of Australia. In addition to the tremendous cost of health care, AIDS is directly affecting business around the world. The majority of cases strike adults in their most productive years. (AIDS is now the leading cause of death of 25- to 44-year-olds in the United States.) A look at how AIDS has affected sub-Saharan Africa, home to 70% of the world's AIDS cases, and the United States, which spends more than the rest of the world combined on AIDS research.

IN THE UNITED STATES

* AIDS will have siphoned off an estimated $81 billion to $107 billion from the U.S. economy by 2000. Costs of the epidemic are already immense: The disease has run up a tab of $75 billion to date, with $3 billion to $6 billion a year being spent on new infections each year

* Two-thirds of companies with 2,500 to 5,000 workers and one in 12 small businesses have employed someone with HIV or AIDS. Researchers at the Centers for Disease Control and Prevention theorize that the impact of HIV on these businesses amounts to about $32,000 over five years per infected employee.

* AIDS-related claims cost the life and health insurance industries nearly $1.6 billion in 1994, as overall payments rose 4.5% from 1993. Since 1986, claims involving AIDS have increased more than 400%, totaling an estimated $9.4 billion.

* The lifetime costs of treating someone with HIV-AIDS in the United States is $119,000.

The federal government spends $2.95 per capita annually on AIDS prevention.

* By some estimates, indirect costs from AIDS are seven times greater than direct costs because of premature death and lost productivity and wages. Scientists postulate indirect costs account for about 80 per cent of total economic costs of AIDS.

* The number of youngsters orphaned by AIDS could more than double by 2000 to 3.7 million worldwide. In 1994, there were 30,000 AIDS orphans in New York City and 10,000 in New Jersey.

* In 1991, 113 of the nation's 2,000 insurers offered an accelerated benefit policy--also known as a viatical settlement--in which companies pay terminally ill patients between 50 cents and 95 cents on the dollar for valid life insurance policies. Today about 215 companies, including 21 of the nation's 25 largest insurers, offer such policies.

IN AFRICA

* Among those hit hardest by AIDS are the well-educated urban professionals, who were expected to bring prosperity to post-colonial Africa. The United Nations estimates that by 2010, AIDS will reduce Africa's overall labor force by 25%.

* The World Bank predicts that by 2000, about 95% of those infected with HIV--the virus that is thought to cause AIDS--will live in developing countries. Bank officials estimate growth of per-capita income will drop by an average of 0.6% a year, due in part to the AIDS crisis, in the 10 worst-affected sub-Saharan African countries.

* Many foreign firms in Arica, from American oil companies to British banks have complained of increased rates of absenteeism because of employee attendance at AIDS funerals and personal sick days taken by those sick with HIV-related illnesses.

* In 1993, the United Nations Development Program estimated that Africa's HIV-AIDS epidemic had already cost the continent about $30 billion.

* A government study in Kampala, Uganda--arguably the nation hit hardest by AIDS--found that some companies, sapped by sick days and deaths, are hiring and training two workers for each position in hopes one will stay healthy. The disease has eaten up 55% of Uganda's health budget and has caused a 5% decline in coffee production in the Rakai district in just two years.

* Zambia's Copper Belt, where one in five miners are infected with HIV, accounts for 45% of the country's AIDS cases. Officials are concerned that the rapid spread of the disease will jeopardize the industry, which provides about 95% of Zambia's foreign earnings.

Sources: "AIDS in the World," Jonathan M. Mann; American Council of Life Insurance; Health Insurance Assn. of America; Business Insurance; Centers for Disease Control and Prevention; "The Coming Plague," Laurie Garrett; "The Road to 2015," John L. Petersen; Times and wire reports; Department of Health and Human Services, Public Health Service, Agency for Health Care Policy and Research; World Bank

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Impact on GDP

Losses due to AIDS in gross domestic product by 2000 under best- and worst-case scenarios (based on low and high estimates of number of AIDS cases):

United States:

Worst case: -1.1%

Best case: -0.9%

Canada:

Worst case: -1.0%

Best case: -0.8%

Africa, Middle East:

Worst case: -4.6%

Best case: -2.4%

Southeast Asia:

Worst case: -2.3%

Best case: -1.7%

Japan:

Worst case: -0.8%

Best case: -0.7%

Latin America:

Worst case: -1.4%

Best case: -0.8%

Europe:

Worst case: -1.0%

Best case: -0.8%

Rest of the Wold:

Worst case: -3.1%

Best case: -1.8%

Sources: DRI/McGraw-Hill, Global AIDS Policy Coalition-Harvard University, World Health Organization

The Pandemic

Number of AIDS cases reported to the World Health Organization, in millions:

1995*: 1.2

* Through June

The WHO estimates that because of underreporting, there are actually 4.5 million AIDS cases worldwide and that 20 million people are infected with HIV, the virus believed to cause AIDS.

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