The specter of genetic discrimination haunts the debate over health insurance in America. Now that the complete human genome is available and more than 400 tests are available for various genetic disorders, the issue is rising quickly to the top of the public agenda. There have been documented cases where people have lost their health insurance once the results of a genetic test became known. Surveys show that a substantial number of people are refusing to take genetic tests at least partly out of fear that they may lose their health insurance coverage if the results show that they have a genetic problem. In an attempt to quell such anxiety, 37 states have passed laws limiting insurers' access to various types of genetic information.
In February, Rep. Louise Slaughter (D-N.Y.) introduced legislation in the U.S. House that would outlaw genetic discrimination in employment and insurance. The bill, which boasts 225 cosponsors, has been endorsed by over 100 organizations, including the March of Dimes, the National Breast Cancer Coalition and the American Civil Liberties Union. Sen. Tom Daschle (D-S.D.) has introduced a similar bill in the Senate. Whatever their intentions, such measures have the effect of making insurance more expensive and of slowing down the sort of research that will someday make genetic problems minor inconveniences.
Mark Hall, a law professor at Wake Forest University, points out that genetic testing brings two different conceptions of "fairness" into conflict. Many people, notes Hall, believe that "it is fundamentally unfair and morally wrong to penalize people due to their bad luck in the genetic lottery." But many people also believe that it's not fair "to charge the genetically advantaged more for their insurance in order to lower costs for the genetically disadvantaged." After all, says Hall, "the advantaged are not responsible for the disadvantaged's misfortune."
This much is certain: The business of insurance requires that underwriters accurately assess the risks that they are insuring against. That's the only way they can charge the proper premiums to cover the payoffs that they must make to the people they insure. Clearly, predictive information from increasingly accurate genetic tests is relevant to assessing risks. Yet two-thirds of states have made it difficult, if not downright impossible, to do so.
Preventing insurance companies from gaining access to the information provided by genetic tests leads to the problem of adverse selection. Adverse selection occurs when there is an asymmetry of information. In this case, people whose genetic tests indicate that they are at high risk of becoming ill or dying prematurely are likely to load up on gold-plated insurance coverage. Because insurers won't know the results of the tests, the premiums they charge will not cover the cost of taking care of high-risk customers.
In essence, genetic privacy laws allow high-risk insurees to lie about their health in order to get more money. This means that healthier customers will have to be charged more to pay for their high-risk counterparts. This situation can set off an adverse selection spiral in which low-risk clients flee the higher premiums and high-risk clients flock to buy the insurance. As premiums rise to cover the unhealthy clients, fewer and fewer people can afford insurance.
Are purchasers of insurance really all that savvy? Absolutely. In 1992, New York State passed a "community rating" law in an effort to bring down insurance prices. The New York law forbade insurers from offering lower rates to companies with younger, healthier employees–the effect of which was to increase rates for those workers. Faced with higher rates, large numbers of younger workers simply dropped their coverage, leaving relatively unhealthy oldsters to fend for themselves. The result was higher rates and fewer people covered by health insurance. The same problem also plagued recent attempts to do the same with the Federal Employees Health Benefit Plan and the California Public Employees Retirement System.
Keeping insurers from getting access to genetic tests is all the more misguided since the information could, in fact, lower the average price of insurance. How? By reducing the amount of unknown risk faced by insurers. Of course, it's indisputable that some people with high risks would have to pay considerably more. But that problem can be addressed on its own terms. One possible solution would be to let patients buy "genetic test insurance" to insure themselves against any unknowns before they take particular genetic tests.
Tom Miller, director of Health Policy Studies at the Cato Institute, suggests another: Insurers could offer a two-tier insurance product. Customers could purchase a long-term, basic insurance component to cover their risks at the time of initial purchase. The second tier would be a savings component in which the insured would deposit premiums that are invested over time. If the insured's health risks go up, he could draw down his invested savings to pay for higher premiums. Any money left over in the savings component could be passed along to heirs, or perhaps withdrawn at retirement. Right now, however, insurers and their customers are discouraged by public policy from seeking innovative solutions to how to handle genetic information.
Adding to the confusion is the current state of genetic therapy. Today, genetic tests can often predict the likelihood of the onset of a disease, such as Alzheimer's or Huntington's, for which there are not yet effective treatments. In a sense, our problem is that we are living in a time when our ability to diagnose genetic problems far outstrips our ability to cure or remediate those same problems. We will eventually move from a diagnostic era to a therapeutic one, a time when patients will be eager to take genetic diagnostic tests because physicians will be able to offer effective, preventive treatments for their disorders.
"Concerns about the negative consequences of genetic information will begin to dissipate as we begin to close the gap between our ability to diagnose and predict and our ability to treat," notes Roberta Berry, a visiting law professor at the University of Notre Dame.
In the meantime, though, laws designed to protect genetic test results are fanning fears of genetic discrimination and making it more difficult to gather the sort of data (and attract the sort of investment) that will help researchers solve genetic problems. In trying to protect individuals, legislators are instead delaying the dawning of that therapeutic age, and causing people to suffer needlessly.