Teaching Case - AIDS and the Insurance Industry

AIDS and the Insurance Industry


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  • Product Description

    In December 1986, Massachusetts Commissioner of Insurance Peter Hiam ordered life and health insurance companies operating in the state to stop testing insurance applicants' blood for antibodies to the AIDS virus. Hiam expressed concern that the tests were not accurate detectors of antibodies and that the presence of antibodies did not mean an individual would develop AIDS. Over time Hiam softened his opposition somewhat, but continued to oppose testing out of a concern that the results would not remain confidential, exposing applicants to discrimination beyond the denial of insurance coverage. For their part, insurers protested that Hiam's stand jeopardized the insurance industry's financial health as well as the millions of state policyholders whose interests he was supposed to protect.

    Learning Objective:
    The case is designed to raise issues concerning adverse selection and the appropriateness of the insurance technique to a condition such as AIDS. It also serves to examine the statistical properties of screening tests and the policy implications of those properties.

  • Other Details

    Publication Date: January 01, 1987
    HKS Case Number: 730.0
    Case Author: Leslie Brunetta
    Faculty Lead: Michael Stoto
    Pages (incl. exhibits): 8
    Setting: United States
    Language: English
    _year: Older than 2000
    _pages: 1-15
    _geography: US & Canada
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