Does Genetic Non-Discrimination Mean Universal Government Health Insurance?

Ronald Bailey | April 26, 2007

The House of Representatives passed the Genetic Information Nondiscrimination Act yesterday in 420 to 3 vote. According to the AP:

The measure makes it illegal for a health plan or insurer to deny coverage or charge higher premiums to a healthy person based solely on a genetic predisposition to a disease. Similarly, an employer could not use genetic information in making hiring, firing or promotion decisions.

Fair enough. But what about people gaming the system? That is, I learn that I have some terrible genetic predisposition so I load up on gold-plated insurance at the same rate healthier people do. It has been argued that this sort of adverse selection could eventually destroy the idea of insurance protecting against unknown risks and leads inevitably to government health insurance.

However, one possible solution to this conundrum is a type of insurance in which rates are set on the basis of age-classes. Basically people sign up when they are young and rates are evened out somewhat over their lifespans. I believe that this is how health insurance works in Switzerland and Germany now. 

I look at some of these issues here and here.  

Comments

Dave W.|4.26.07 @ 1:53PM|#

However, one possible solution to this conundrum is a type of insurance in which rates are set on the basis of age-classes.

This is way, way overdue.

It is constantly surprising and vexing to me that the supposedly free market we have in the US seems to all but ignore age as an actuarial variable. It seriously undermines my confidence that US actuarial work is based on the likely costs of providing services to the insured.

|4.26.07 @ 1:54PM|#

That is, I learn that I have some terrible genetic predisposition so I load up on gold-plated insurance at the same rate healthier people do

Predisposition does not make you less healthy than your peers, does it?

At the time you "load up" if are of the same health as your peers how is that gaming the system?

Predispositions are not guarantees, correct? You just happen to have better understanding of your odds.

How is that different that say knowing you are a much higher risk taker (avid sky-diver, bungee jumper, race car driver in your spare time, mountain climber, etc) than you your peers, and not disclosing that?

In both cases you know that your odds of needing insurance are greater than your peers. I don't see how this is considered "gaming" the system?

|4.26.07 @ 2:04PM|#

The problem of course lies in the definition. Being female puts you at a greater risk for breast cancer, and having a Y chromosome boosts risk by an undefined amount for prostate cancer. In a true free market, competing insurers decide prices for risk, and people self sort accordingly. Yes, I think this will lead to government universal health care, which I have posted before, will continue the trend towards a police state.

|4.26.07 @ 2:24PM|#

In both cases you know that your odds of needing insurance are greater than your peers. I don't see how this is considered "gaming" the system?

It is gaming the system because you are allowed to do it but the insurance company is not.

Guy Montag|4.26.07 @ 2:26PM|#

So, no disclosure statement that you are part of the big Y chromosome conspiracy?

|4.26.07 @ 2:31PM|#

I checked the THOMAS Web site - you'll never guess which Presidential candidate voted "Nay" on this bill.

|4.26.07 @ 2:35PM|#

It is gaming the system because you are allowed to do it but the insurance company is not.

If the rules are such, then how is it gaming the system? You are playing by the rules.

You can argue that the rules are unfair and the system is broken, but to imply that acting within the defined rules of of the system is somehow cheating/skirting the rules is false.

|4.26.07 @ 2:47PM|#

If the rules are such, then how is it gaming the system? You are playing by the rules.

Well, yes, if you want to get all tautological and believe the "rules" are set solely by government without necessarily complying with reality or natural laws.

Let's agree to say it games the very concept and social utility of insurance. Your other examples, where insurance companies are free to discriminate based on what they can discover about your riskiness, don't.

|4.26.07 @ 2:49PM|#

I don't agree with the premise that its fair that insurance companies can't use the information. As usual, congress isn't letting the free market provide the optimal solution. Yes, I'm saying that people that are more likely to contract a disease should pay more for insurance. How is that unfair? Should we buy their drugs for them, too? Should we pay for their surgery? Why should those who aren't predisposed to the genetic disease pay for their insurance?

|4.26.07 @ 2:52PM|#

"Why should those who aren't predisposed to the genetic disease pay for their insurance?"

Because socialism is the answer to all of our troubles.

D.A. Ridgely|4.26.07 @ 3:10PM|#

I suspect the answer to Mr. Bailey's title question is yes, and that the worsened problem of information asymmetry in health insurance will provide precisely the sort of leverage the state will require to make its case that the market is incapable of continuing to provide private health insurance.

|4.26.07 @ 3:11PM|#

Similarly, an employer could not use genetic information in making hiring, firing or promotion decisions.

Sound to me like this outlaws gender-based affirmative action. And depending on whether you believe race is a social construct, it might also outlaw racial affirmative action.

Highway|4.26.07 @ 3:13PM|#

Calling Dr. Pinero... Dr. Hugo Pinero...

s.m. koppelman|4.26.07 @ 3:27PM|#

Maybe we'll just start drowning high-cost babies, like they do in rural China. That's a rational market response, isn't it?

|4.26.07 @ 3:47PM|#

Any response that involves violence or coercion is not a market response.

|4.26.07 @ 4:29PM|#

Ah, health care. Where the free market simply does not, and cannot, work.

A fact that's obvious to pretty much everybody but Americans.

Or it may be obvious to us and we're too cheap and myopic to pay for it. I'm not sure.

jgray|4.26.07 @ 4:36PM|#

james b.
surely it is obvious by now that gender and race are culturally determined identities?

haywood's proxy
the free market simply does not, and cannot, work
though that may seem obvious, it is a fact that healthcare in the usa is the best if not the most widely distributed. we definitely are not too cheap: we spend more on it than anyone else, and the trend is rising dramatically. as for those who will get screwed by their genes, its not my problem; nature/god fucked 'em.

Russ 2000|4.26.07 @ 4:41PM|#

Maybe we'll just start drowning high-cost babies, like they do in rural China.

Steve, what the heck are you talking about?

|4.26.07 @ 4:42PM|#

That settles it. Thus spoke Haywood.

|4.26.07 @ 4:47PM|#

Q: Maybe we'll just start drowning high-cost babies, like they do in rural China. That's a rational market response, isn't it?

A: Any response that involves violence or coercion is not a market response.

Very true. The market response would be to let the babies die on their own unless they enter a mutually agreed upon contract with a care provider.

|4.26.07 @ 4:56PM|#

Ah, health care. Where the free market simply does not, and cannot, work.

That a legitimate argument can be made that our health care system ain't working well enough is not the same as saying that a free market cannot work. Socialized medicine doesn't work well enough either.

|4.26.07 @ 5:13PM|#

So when they find that my family's chronic alcohol consumption has a genetic component, I can rest assured that my insurance company will have to cover my new liver? Bottoms Up!

|4.26.07 @ 5:30PM|#

Ah, health care. Where the free market simply does not, and cannot, work.

How do we know? Its never been tried, at least in our lifetimes.

dan|4.26.07 @ 5:47PM|#

jgray:

it is a fact that healthcare in the usa is the best if not the most widely distributed.

Totally, 100% untrue. By any objective measure, US healthcare is far from the best in the world, and on some measures, including infant mortality, it's close to the worst.

There are tons of links for this. here's one, from a publication that is in no way biased towards socialistic solutions: http://www.businessweek.com/technology/content/sep2006/tc20060921_053503.htm

Yes, there may be explanations for our horrible statistical outcomes, such as greater wealth disparities here. But still, there is absolutely no basis for claiming that "healthcare in the usa is the best."

The Wine Commonsewer|4.26.07 @ 6:25PM|#

The problem actually lies in the government deciding how insurance is marketed. To whom, at what price, who cannot be refused coverage and on what basis. Hardly a free market that doesn't work.

The Wine Commonsewer|4.26.07 @ 7:00PM|#

But still, there is absolutely no basis for claiming that "healthcare in the usa is the best."

Maybe if you factor out the county hospitals, the Medicare abominations, the VA snake pits, and the military medical facilities, you unskew the stats.

I'm skeptical anyway, you cannot make a meaningful comparison between infant mortality rates in static, homogeneous cultures such as Singapore, Iceland, or Sweden, whose population is less than Metro L.A., with a dynamic culture such as the US where illegal immigration from poor countries during the last decade or so has been greater than than the entire populations of Singapore, Iceland, and Sweden, combined.

It's pretty likely that if you compare the infant mortality rates of US Jews, a stable homogeneous ethnic group, that you'll find infant mortality numbers comparable to Sweden's.

Guy Montag|4.26.07 @ 8:03PM|#

The problem actually lies in the government deciding how insurance is marketed. To whom, at what price, who cannot be refused coverage and on what basis. Hardly a free market that doesn't work.

How 'bout we just toss the insurance market into the free market and just let the government make sure the transactions are fair?

|4.26.07 @ 8:39PM|#

Haywood,

A large majority of Americans do realize that. Polls asking "would you support a universal health care system if it meant you have to pay higher taxes" typically get about 60-70% support.

|4.26.07 @ 8:56PM|#

Removing an insurer's ability to make a targeted determination of premium will just lead them to spread the cost to the rest of the consumers.

|4.26.07 @ 9:08PM|#

"That is, I learn that I have some terrible genetic predisposition so I load up on gold-plated insurance at the same rate healthier people do."

Then they lose their job for unrelated reasons, and the lose their insurance!

|4.26.07 @ 9:12PM|#

Polls asking "would you support a universal health care system if it meant you have to pay higher taxes" typically get about 60-70% support.

Of course, these are the same poll respondents who choose, in many instances, not to pay for healthcare insurance now available at their place of work...somehow, the vague notion of just what 'higher taxes' means never seems to equal the expectation of what coverage means. Healthcare demand will always expand to consume supply when someone else is paying.

|4.26.07 @ 9:28PM|#

"Removing an insurer's ability to make a targeted determination of premium will just lead them to spread the cost to the rest of the consumers."

So? They already do that.

On the annoyance level, funding care for people with genetically-linked disease is way, way, way below the annoyance of funding care for people with injuries inflicted through rank stupidity and recklessness.

|4.27.07 @ 12:18AM|#

The infant mortality stat is meaningless given the prevalence of preemies in the US.