The Rise and Implications of Viatical Settlements During the Early AIDS Crisis

In the early years of the AIDS crisis in the United States, the government did not provide sufficient support for people living with HIV, leading many to sell their life insurance policies to investors in order to access immediate funds. These transactions, known as viatical settlements, involved patients selling their policies at a discount to investors who would later collect the full payout after the patient's death. This financial instrument emerged as a response to widespread job loss, housing insecurity, and loss of health insurance among those affected by AIDS. The viatical settlement market reflects broader systemic issues, including the reduction of public assistance programs, privatization of healthcare, and the absence of a robust social safety net during the Reagan and Clinton administrations. Viatical settlements were often viewed sensationally as exploitative, but they were a predictable outcome of policy decisions that left vulnerable populations without adequate healthcare or income support. The market for these policies highlighted how private capital filled voids created by retreating government services. Activists have emphasized that the situation was a political and structural failure rather than a moral failing of individual investors or patients. The AIDS epidemic also exposed disparities in access and survival, particularly among marginalized groups such as Black and transgender individuals, who often lacked life insurance to leverage in such transactions. The broader implication is that survival needs were increasingly privatized, resulting in markets that commodify health outcomes. Over time, the political and activist discourse around AIDS has shifted, becoming more depoliticized and institutionalized. This shift has coincided with reductions in funding for HIV/AIDS programs, the expiration of Affordable Care Act subsidies, and policies that have reduced Medicaid coverage. Contemporary challenges, such as denial of disability benefits for long COVID patients and the rise of medical debt enterprises, echo the viatical market dynamics by monetizing patient vulnerability when public support systems are insufficient. The article stresses the importance of recognizing these patterns as systemic and political choices rather than isolated or individual behavior. The ongoing dismantling of public health and social welfare infrastructure perpetuates new market formations that profit from unmet human needs. For insurance professionals and policymakers, these developments underscore the need to understand how regulatory, compliance, and market dynamics intersect with social determinants of health and economic security. The legacy of viatical settlements serves as a cautionary example of how gaps in public policy can lead to complex financial markets that place individuals' lives at economic risk. This historical perspective is vital as current healthcare policies and benefits face uncertainty, highlighting the broader implications for insurance markets, risk assessment, and the role of state versus private intervention in health and financial security.