Posted by: bridget | 25 February 2008

Insuring Against Losing the Genetic Lottery

As DNA tests become more popular, many people are worrying about how insurance companies will deal with the results of those tests.  As people who switch carriers have to disclose health histories and may have to disclose the results of any DNA tests, they could be denied coverage or have to pay higher premiums. 

With much fluff and anecdote, but little substance, the NY Times details the lives of people with family histories of certain diseases (here).  Some lawmakers are considering legislation that would prohibit insurance companies from charging higher premiums to those who lost the genetic lottery.  Many people are paying for DNA tests themselves, so that the results will never be in an official file.

A lot of this misses the point.  The real question is whether or not having a genetic predisposition to a certain disease is an insurable risk.  We can insure against anything – flood, fire, car accidents, or even a hole-in-one.  Insurable risks have several characteristics, such as randomness of the event, unpredictability, unforseen and unexpected losses, ability to spread the risk over large numbers of people, a limited and determinable financial loss.  If we define “unforseen harm” as that of having the abnormality itself, rather than having the actual disease, genetic abnormalities fit well within the defintion of an insurable risk.  The chance of getting the disease itself, however, is not an insurable risk, as it is a near-certainty; at the very least, the costs of such insurance should reflect the elevated risk.

There are moral hazards associated with insurance, especially health insurance.  An otherwise healthy woman with a 60-90% chance of getting breast cancer could save money by purchasing minimal insurance until age 40, then select a comprehensive plan that will cover the near-certain costs of her treatment.  Such is not an insurable risk. 

From a free-market standpoint, there could be a market for insurance against having a genetic disorder: the insurance company will pay the increased premiums attributable to genetic disorders, or, in the alternative, pay the cost of treatment.  The only requirement for such insurance would be that people not know their genetic make-up when they purchase such insurance. 

From a legislative standpoint, the chance of having a genetic mutation could be treated as an insurable risk that can be combined with health insurance, in certain situations.  If the patient has insurance at the time of testing, and maintains such insurance (or similar) up to the time of disease, the moral hazard associated with selective purchasing of insurance plans would be reduced. 

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Responses

  1. We need a revolution. Medical students and Pharma Ph.Ds need to be born again. They need to stay focus on what’s imporant. People.

    Outside of this, there’s little hope for advanced medicine.

    We may end up going back to the old fashion shaman.

    Edgar.

  2. Thanks for stopping in and commenting. :)

    Oh, yes, we could go back to the shaman. I happen to think that that will occur if we continue down the road of not giving people appropriate compensation for the parts of their lives sacrificed for the betterment of other’s lives. (That’s because I’m a raging capitalist who thinks that the free market will save the world.)


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