Gene Expression

Dr. Daniel MacArthur reports on shenanigans in his homeland, Australian insurance company offers discounted genome scans to customers; read the fine print!:

A reader pointed me to this article in the Australian news: it appears that a major Australian insurance company, NIB, is planning to offer half-price genome scans from personal genomics company Navigenics to 5,000 of its customers.

The catch is in the fine print: those who take up the offer “may have to give the information to life insurance or superannuation providers”, according to the article. In a letter to customers, the chief executive of the company explicitly says that this information could be used to alter the premiums people pay for their life insurance….

You can expect to see some reflexive outrage following this announcement; people have a visceral dislike of the notion of insurance companies using genetic information to make decisions about policy. Indeed, this dislike has been enshrined in law in the US via GINA , which prohibits the use of genetic information by health insurance providers and employers (although it’s worth noting that the law doesn’t apply to life, disability or long-term care insurance policies). Australia has no such law.

I’m personally pretty ambiguous about the need for bans on the use of genetic information by insurance companies, and tend towards opposing them. However, I do accept that there is a genuine danger that insurance companies will weight genetic information more highly in their premium calculations than is warranted, thus unfairly discriminating against potential customers. Especially in these early days, it is crucial that companies get the science right when they perform these calculations.

In general, I’m with Dr. MacArthur. Blanket bans just open up opportunities to be circumvented, and will end up distorting the market. One of the problems with the American insurance system is that it’s totally scaffolded by regulation on a state by state level.

I do believe in a general way that our psychology is biased so that we’ll oppose strong forms of genetic discrimination because it seems arbitrary and capricious. But instead of passing laws which we perceive as cost-free expressions of outrage, it would be more efficacious if we bit the bullet and raised taxes to fund more research and enable affordable health care for everyone (or reallocated resources from the budget). Banning genetic discrimination is like banning discrimination against preexisting conditions, humans seem to find the bans appealing on intuitive grounds, but they undermine the logic of the insurance system. Passing a fiat law does not get at the structural root of the problem.

P.S. Also, it’s kind of funny that people get worked up about genetic tests, as family information is out there and so means that insurance companies can infer a lot already.

Comments

  1. #1 John Emerson
    February 16, 2010

    Genetic testing is another pretty good argument for universal health care, since otherwise we’d quickly end up with a fairly large class of genetic uninsureables who would also be almost unhireable.

    People get worked up about genetic tests because its one more tool in the hands of insurance companies that people already mistrust.

    For-profit health insurance assumes imperfect knowledge. The more perfect the knowledge, the less the system works. You just divide the population into risk pools and charge each pool just enough to make a profit. But the whole logic of insurance is to even out uncertainty, so that instead of a calamity hitting a randomly chosen one out of a thousand people, everyone pays 1/1000 of the cost of the calamity. But if you can predict who that one person will be, no one would benefit from insurance except for that one person.

    The main reason for the patchwork of state regulation is the weakness of federal regulation. It’s actually a structural outcome of a federal system. So the better the legislature/governor of a state, the better the regulation, and that’s true regardless of how you define “better”.

    It’s probably true that new technologies and new forms of knowledge can’t be resisted and their use can’t be forbidden, but they mandate compensatory changes which are usually resisted.

  2. #2 Daniel MacArthur
    February 16, 2010

    Nice post – and I couldn’t agree more on your points about the most sensible policy responses to this issue. If you really believe that people shouldn’t be disadvantaged by their genetics, the only viable long-term solution is an affordable, universal healthcare system.

  3. #3 neandrothal
    February 16, 2010

    Would you also then propose universal life, long-term care, and disability coverage? Or just turn them into annuity plans?

    BTW, under GINA genetic information is defined to include family history, so in the U.S. health insurance companies would not be allowed to acquire family history information or use it in determining coverage.

  4. #4 John Emerson
    February 16, 2010

    Neandrothal, if you’re talking to me, I’d just propose something like what most of the rest of the developed world has.

  5. #5 M. Simon
    February 18, 2010

    The only way to get more health care is to lower the costs. Taxing will not do that. Insurance will not do that.

    Instead of spending money on health care why not put the money into research and development of ways to lower costs? It would be cheaper and more effective.

  6. #6 miko
    February 18, 2010

    “The only way to get more health care is to lower the costs.”

    We already have the most health care, and it doesn’t improve our health. People with stomach aches get CAT scans. What we need is smarter, efficient health care. And yes, lower costs.