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Studies have shown that patients who are infected with HIV have a reduced chance of dying if treated with azidothymidine (AZT). The health care costs of AIDS patients who are treated with AZT were compared with those of patients who were not treated with the drug. Since treatment with AZT is the standard of care for people with AIDS, it is necessary to determine the health care costs so that financial needs can be meet. The health care costs for 12 months were determined for seven patients who received treatment with AZT during a clinical drug trial, and a matched group of patients who met the criteria for the trial but did not participate in it. Health care costs were lower during the 12 months, especially in the first six months, for those treated with AZT than for those not treated with AZT. The average health care costs were $22,472 for patients treated with AZT, including the $8,000 for the cost of the drug, compared with $41,133 for those not treated with AZT. The lower cost was primarily due to lower use of hospital services. However, the cost for the patients treated with AZT rose in the second six months, due to increased use of inpatient hospital care. With this rise in the second six months, it is doubted that the total lifetime health care costs for AIDS patients will be lower if they are treated with AZT than if they are not. The expense of AZT and the high cost of the terminal care of AIDS patients make the costs comparable to those who are not treated with AZT. The cost per year of life gained with AZT treatment is estimated at $16,000. (Consumer Summary produced by Reliance Medical Information, Inc.)

This article reports on the findings of a study of medical care expenditures of persons with acquired immunodeficiency syndrome (AIDS) treated at San Francisco General Hospital in 1984. We found that mean charges per AIDS hospital admission were $9024, mean charges of patients with AIDS who received all their hospital inpatient and outpatient care at San Francisco General Hospital in 1984 ranged from $7026 to $23 425, and mean lifetime inpatient charges of patients with AIDS who died and who had received all their inpatient care at the hospital were $27 571. These latter charges were considerably lower than previously published estimates of lifetime direct medical care costs of patients with AIDS, and the possible reasons for the differences include much lower lifetime use of hospital services and somewhat lower cost per hospital day.(JAMA 1986;256:3103-3106)

Prologue:In less than a decade, the dread disease acquired immunodeficiency syndrome (AIDS) has become a major influence on the consumption of medical care resources in the United States. In this paper, Anne Scitovsky discusses a subject on which she is acknowledged to be the leading American expert—the economic cost of AIDS. Scitovsky is currently the lone social scientist researcher at the Palo Alto Medical Foundation/Research Institute The organization devotes most of its resources to the pursuit of biomedical research. Scitovsky, who holds a master's degree in economics from Columbia University, has for many years been contributing highly valuable studies to the medical literature. During World War 11, she worked at the Social Security Administration with the late Selma Mushkin, one of the early pioneers in health economics. Before Scitovsky initiated her work on AIDS in 1984, she had carried out studies of changes in the costs of various illnesses, which enabled her to estimate the impact on costs of changes in medical technology. She also published a well-known study evaluating the various studies of medical care costs in the last year of life, warning against premature conclusions regarding wasteful or inappropriate use of medical resources that were being drawn from them. Long before The RAND Corporation launched its national health insurance study and documented that demand for medical care is greatly influenced by what people have to pay for it, Scitovsky had arrived at a similar conclusion in a much less expensive and smaller research study. The Palo Alto Medical Clinic had for years offered some of the employed groups that received care there comprehensive coverage without any cost-sharing requirements. When utilization reached unacceptably high levels, the clinic introduced a more modest package of benefits that required a patient cost-sharing contribution of 25 percent. Examining the results of this natural experiment in the late 1960s, Scitovsky determined that people who are required to pay for a portion of their medical care do indeed use it more sparingly than they would if it were free.

This analysis of out-of-plan use of physician and paramedical services under a Kaiser plan and under a prepaid option offered by a predominantly fee-for-service group practice (Clinic plan) deals primarily with services that members could have obtained from plan providers (“covered services”). The extent and pattern of out-of-plan use were found to be similar. While 16–20 per cent of plan members used some out-of-plan covered services and the mean number of such services was about one half visit per member per year, most out-of-plan users were occasional users, 10–12 per cent of users (or 2 per cent of plan members) accounting for 50 per cent of all out-of-plan covered services. The principal member characteristics associated with out-of-plan use were dissatisfaction, health status and having other insurance. The literature on out-of-plan use is also reviewed.