(FORTUNE Magazine) – A TELEVISION INTERVIEWER intercepts a woman as she emerges from a Manhattan office building. She is 30ish, white, an executive, well tailored, well spoken, and so well informed about AIDS that not a macabre detail has eluded her, especially the warnings that the disease now threatens heterosexuals. Yes, she tells the reporter, she is very afraid of catching the virus. Watching interviews of this sort on his TV set in Atlanta, Dr. Harold Jaffe, director of AIDS epidemiology at the federal Centers for Disease Control, gets visibly irritated. The cameras, he says, are missing the people who are really in danger, such as young inner-city women who might be having sex with drug addicts. ''Why don't they interview a 15-year-old black girl coming out of an abortion clinic?'' he asks. Jaffe thus notes a disturbing anomaly of the AIDS crisis. The wrong people are frightened. Some of those who are at greatest risk seem oblivious, while those who seem to be at almost no risk are panicky. AIDS has become an obsession, especially among the upper classes, and this gets translated into a demand that the federal government attack it with a lot of money. AIDS is without question a horrible disease that deserves a high ranking on the list of national concerns. But as things are going, the country will spend far more money on AIDS than can be put to good use. Though some proponents of big spending on AIDS complain of government ''apathy,'' the Reagan Administration is already quite openhanded. It has proposed a budget of more than $800 million for AIDS education, testing, and research in fiscal 1988. That does not include $300 million or so the federal government will pay out as its share of Medicaid benefits for victims of the disease. One way to get some perspective on this $800 million is to compare it with amounts spent to cope with other ills. The federal government will spend considerably less than that in fiscal 1988 on all aspects of alcohol abuse, including drunken driving. It can reasonably be argued that in terms of total human misery, alcohol abuse is a larger problem than AIDS. Last year some 6,000 Americans died of AIDS, and some 24,000 were killed in alcohol-related traffic accidents. Many of those AIDS victims were still young, but so were many of those accident victims. For fiscal 1988, proposed federal spending on schizophrenia comes to about $30 million, less than 4% of the $800 million for AIDS. Schizophrenia afflicts about 1.5 million Americans, a large proportion of whom are still young and perhaps 10% of whom, if the past pattern continues, will commit suicide. To some people, $800 million a year for AIDS is too little. A panel of distinguished authorities assembled by the National Academy of Sciences recommends that by 1990 the government spend $1 billion a year on research and another $1 billion on education, testing, and additional treatment programs for drug addicts. Nice round figures.

LIBERALS like Senator Edward Kennedy want to spend more on education. Conservatives like Senator Jesse Helms call for mandatory testing of immigrants and people about to marry. What binds the diverse and sometimes warring advocates together is the belief that this is no time to be counting dollars. ''You can't think of it as just another disease,'' says Louise Russell, a senior fellow at the Brookings Institution. ''It's more like a war or a plague.'' The evidence does not support that view. Researchers can trace the AIDS virus back ten years in the U.S. and have found little basis for the predictions that the disease will ravage the country like a 14th-century Black Death. The money spent on AIDS should be spent as prudently as any other and concentrated where it is needed. Says Dr. William Winkenwerder, an AIDS specialist in the Department of Health and Human Services: ''We have a lot of worthy health programs and a big federal deficit.'' So far in the U.S. almost 40,000 people have developed AIDS, and more than half the victims have died. Public health officials estimate that another 1.5 million carry the virus. Many will ultimately develop the disease. Nonetheless, the data collected by the Centers for Disease Control suggest that AIDS has not seeped far beyond the principal risk groups: male homosexuals, intravenous drug users, and female sexual partners of male drug users. In New York the virus has infected as many as 60% of the city's 200,000 or so heroin addicts and perhaps the same percentage of its male homosexuals, who may number as many as 500,000. With that kind of saturation, New York would be a likely place for the virus to burst into the general population. Representatives of homosexual organizations keep warning that this is happening, or is about to happen. But the evidence so far indicates that it hasn't and probably won't. In a study of 345 men and women in New York who suffered from a variety of venereal diseases, 51 were found to be infected with the AIDS virus. All but one of these, however, used intravenous drugs, had sex with drug users, or were homosexual. And perhaps the 51st fitted into one of those high-risk groups as well but didn't want to admit it. On the East Side of Manhattan, 160 women who were considered to be at low risk but were nonetheless anxious submitted to blood tests. None carried the virus. To understand why the epidemic has remained largely confined to high-risk groups and why the national campaign against it should be focused on them as well, it is important to understand how AIDS is communicated. People get AIDS by taking the blood, semen, or possibly vaginal secretions of an infected person into their bloodstreams. A small and dwindling number of people pick up the virus from contaminated blood in transfusions. Almost everyone else who gets AIDS does so through sexual acts or injection of drugs. WHEN ONE intravenous drug user passes along an unwashed syringe to another, the chances are he passes along a residue of his blood. The most dangerous sexual activity by far is being the recipient partner in anal intercourse. Without doubt the virus can be spread in vaginal intercourse as well, but not so easily. The blood vessels of the rectum are more numerous and fragile than those of the vagina. The virus has spread rapidly among heterosexual men in Africa, one theory holds, because many of them suffer from lesions on the penis. Verified instances of AIDS among American-born heterosexual men who do not inject drugs are rare. How rare no one can say with assurance: In some cases the route of transmission is unknown. But the evidence suggests that for heterosexual American men, the risk of getting AIDS from sexual intercourse is less than the risk of being struck by lightning. FOR WOMEN, unfortunately, the risk is much greater. A small but apparently growing proportion of AIDS victims in the U.S. is made up of women who apparently got the disease through heterosexual intercourse, which includes anal and oral as well vaginal sex. Most of them, far out of proportion to their share of the population, are young black and Hispanic women who have sex with drug users. These women run a particular risk if they live in New York, Miami, or a city in northern New Jersey, says Jaffe. Perhaps because intravenous drug users as a class are poorer and less traveled than homosexuals, the AIDS epidemic among drug users shows more regional concentration. Blood samples taken last year indicated that only 3% or so of intravenous drug users in Los Angeles carried the AIDS virus, compared with that dismaying 60% or so in New York and 50% or more in Newark. The babies that infected women bear are especially tragic cases. New York alone already has hundreds of children born with the AIDS virus and expects to have thousands by the end of the decade. Their prospects are wretched. Many, perhaps all, will survive for only a few years. For their sake and the sake of other victims, present and potential, the government should spend a lot of money on AIDS. But as with all public spending, the architects of programs and the appropriators of funds should not disregard ratios of costs to benefits. Nor should they fail to compare amounts spent on AIDS with spending on programs to combat or alleviate other ills. The Administration proposes to spend $248 million on AIDS education, counseling, and voluntary testing in fiscal 1988, nearly twice as much as this year. That is probably too much. No one inside government or out knows a lot about how to change risky behavior through education. Much of the money spent on AIDS education will be wasted, some on honest mistakes and some on flimflams. Says a federal official involved in the AIDS program: ''Agencies are just handing out money, saying, 'Here's $5 million, go set up a program for high school students,' or whatever.'' But the Administration's plan is reasonable compared with what has been proposed in Congress. One bill calls for up to $300 million for education alone, and another would provide up to $400 million for voluntary testing and counseling. At the very least, the federal government should keep its money out of programs that are patently misguided, such as broad plans to teach everyone about AIDS. The Senate AIDS education bill would authorize spending of up to $50 million for a television advertising campaign that would reach 90% of the nation's households at least 15 times. ''We see this as comparable to a major product launch,'' says a staffer for Senator Kennedy, chairman of the Labor Committee, which prepared the legislation. ''We want sensible behavior promoted as aggressively as radial tires, candy bars, and diet soft drinks.'' But AIDS doesn't need a Madison Avenue introduction. The polls show the ''product'' has an extraordinarily high name recognition, familiar to 90% of Americans. Such a campaign could establish an expensive precedent as well. Except for military recruitment, the federal government generally does not buy advertising time or space. If it pays for AIDS advertising, why not ads aimed at preventing cancer and heart disease? SOME CONGRESSMEN have suggested that Surgeon General C. Everett Koop's 36- page brochure on AIDS be mailed to every household in the country. The cost would run as high as $20 million. But free enterprise can get Koop's most important message to the literate middle class without cost to the taxpayers. The message: Use condoms.

The federal government should concentrate education funds on poorly informed high-risk groups, and that means mostly drug users and their sexual partners and teen-agers growing up around them. The government has allocated $176 million for education of high-risk cases, but has not broken its request down in detail. For the most part the feds will simply help underwrite programs run by states, cities, and private agencies, which among other things will keep Washington at arm's length from quasi-underground projects that tacitly condone drug use. ''You don't reach drug abusers through ads in the New York Times,'' says Edith Springer, a former heroin addict who works in a courageous $200,000-a- year program supported by New York City and a private foundation. She and other reformed addicts make the rounds of sleazy shooting galleries where as many as 100 addicts a day share a few sets of injection paraphernalia. She tries to persuade them to get treatment. But she also shows them how to kill the virus by cleaning their gear with bleach. In addition, she instructs them on how to use condoms. The federal government should support such projects. Taxpayers who don't feel much compassion for drug addicts might be persuaded by the economics. As AIDS victims, addicts are especially costly. Unlike many homosexuals, addicts are usually without health insurance, savings, and helpful friends, so they rely heavily on Medicaid. And for unknown reasons, addicts are more vulnerable than homosexuals to an opportunistic strain of pneumonia that puts them in the hospital for intensive care. Homosexuals have already been grimly and thoroughly educated on the danger of AIDS. In San Francisco and elsewhere, the rate of new AIDS infections among homosexuals has dropped dramatically in the past few years. But because the gestation period of the disease is several years in most victims, many thousands of homosexuals already infected with the virus will develop AIDS. Some of the funds the Reagan Administration is requesting will go for such services as psychiatric guidance, housekeeping assistance, and instruction on how to avoid spreading the virus. Homosexuals as well as drug users will benefit. OF ALL proposed modes of defense against AIDS, mandatory testing is the most controversial, partly because of fear that forced testing may lead to < discrimination and quarantines. It would also waste resources to require blood tests of large groups of people who are in no particular danger. President Reagan has suggested that all people about to marry ought to be tested. About five million people get married every year, and the annual cost could run to $150 million or so. Experience strongly suggests that such a project would not turn up a lot of positives and therefore would not be cost effective. On average across the U.S., screenings of Red Cross blood donors disclose only one case of infection with the AIDS virus among 10,000 people. Some states have discarded the prenuptial blood test as a way of uncovering other venereal diseases just because it proved inefficient. New York dropped the requirement in 1985 after a study showed that over five years the state had charged its about-to-marry citizens $21 million to turn up 45 cases of syphilis. Many public health officials believe the purpose of testing should be not so much to discover positives as to lure people from high-risk groups into the office for a heart-to-heart talk about their behavior, whether they're positive or negative. The best way to get them to come through the door, the argument runs, is to keep the testing voluntary and anonymous. The great hope, of course, is that research will lead to drugs and vaccines to defeat the disease. The National Institutes of Health wants to spend $422 million for AIDS research next year, a two-thirds increase. The largest single slice, $179 million, will help finance the search for a cheaper and more effective treatment than the only drug currently approved, Retrovir, also known as AZT. Retrovir, made by Burroughs Wellcome, slows replication of the virus, but it can bring on severe side effects, including anemia. Moreover, the treatment costs $10,000 or so a year. And it is a palliative, not a cure. Still, improving on Retrovir won't be easy. ''Laymen don't appreciate how rare it is to find any treatment for a virus,'' says Dr. Anthony Fauci, who coordinates the AIDS research program at NIH. And a cure -- a remedy that will rid the body of the virus -- may be beyond reach. Science has yet to devise a drug that will cure any virus. People do recover from viral infections, of course, but what knocks out the virus is the body's own immune system. Science has concocted vaccines that prevent viruses like flu, polio, and smallpox from taking hold to begin with, but the AIDS virus is especially ( recalcitrant, and prospects for a vaccine are not bright. Though NIH will invest $52 million in vaccine research next year, Fauci does not think a vaccine will be available before the mid-1990s at the earliest. NIH should probably not try to expand its AIDS budget to that $1-billion-a- year goal set by the National Academy of Sciences panel. It is far from clear that the agency can put that much money to good use. NIH might have to resort to its practice of 1983 and 1984, when to get some AIDS projects rolling, it discarded the usual pattern of financing one request out of three and tossed money at every respectable application for AIDS research funds. Such unselective largess can make for poor science. Moreover, putting too much money into AIDS could begin to cut funding for research on other ills. TREATMENT is the category of expense over which government has the least control. Public health officials expect that by 1991 the country will be caring for 145,000 AIDS patients, about nine times the current number. The total cost may run anywhere from $8 billion to $16 billion a year, largely depending on how many days patients are hospitalized. Hospital rooms cost around $800 a day. San Francisco AIDS patients spend an average of only eight days per stay in the hospital, largely because organized volunteers care for people at home. In New York, where the AIDS population includes a large number of drug users, the average stay is more than twice as long. Perhaps the feds should encourage New York and other cities to form networks of houses and small apartment buildings where AIDS patients can be cared for in their noncritical phases by workers who are paid less than hospital specialists. That might save quite a bit of money in years ahead. As the number of AIDS patients grows and the economic burden of providing care for them gets heavier, sympathy may wear thin. That seems especially likely if the victims continue to be mostly homosexuals or drug users. Keeping the cost of AIDS down may help keep the level of compassion up.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: Steeply rising government outlays for AIDS are heading toward $3.8 billion in 1991, including Medicaid costs. Background: part of a cell attacked by the AIDS virus. DESCRIPTION: Government spending on research into AIDS, 1980, 1987, with projection for 1991.