When New York's highest court ruled last month that insurers may deny medical coverage to people infected with the AIDS virus, it highlighted a major problem in health care: People who are already sick or at high risk of getting sick have trouble buying insurance.

More than 30 million Americans have no health coverage from either private insurance companies or government health programs. A year ago, President Bush called for a major review of the gaps in health insurance.

Meanwhile, in Congress, several plans to reform health coverage are now being debated. As Sen. John D. Rockefeller IV (D-W.Va.) has said: "People are afraid that when the chips are down and they are faced with a crisis, their health protection just won't be there for them."

Most Americans obtain coverage through their employers regardless of their health status. But applicants seeking individual policies and those who work in small businesses are usually screened to see if they have a disease such as leukemia, diabetes or schizophrenia that would put them in an above-average risk category.

If a person has a medical condition such as asthma or severe heart disease, for example, the company may deny or delay coverage or raise premiums.

"The health insurance industry is set up to minimize exposure to very sick people," said Robert Hunter, president, National Insurance Consumer Organization.

In a 1988 study by the Congressional Office of Technology Assessment, only 4 percent of applicants seeking individual policies had to undergo a physical exam or medical tests. "Screening for HIV {AIDS} infection may be the most controversial, but it is only one of many tests ordered by underwriters," OTA senior analyst Jill Eden told Congress last September.

That is one reason the New York Court of Appeals ruled in favor of the health insurance industry in overturning a state regulation that prohibited insurers from testing applicants for the AIDS virus.

Private health insurers are also calling for legislative reforms and a greater government role in covering the poor and the medically uninsurable. Almost half the states have special coverage plans for people who can't get private insurance.

But overshadowing the gaps in health insurance is the larger problem of escalating costs. Americans now spend $650 billion a year on health care -- $2,600 per person -- and since 1970, the price of health care has risen 60 percent faster than general inflation.

"The key step is cost containment," said Carl J. Schramm, president of the Health Insurance Association of America. "We won't solve any of these {problems in health insurance} until we institute cost reforms."