Gattaca, Gattaca, Gattaca!


There are a couple odd things about yesterday's Washington Post op-ed calling for legislation to bar insurance companies from making use of genetic screening information. The most obvious one is that nowhere in eight paragraphs do we see the words "adverse selection." This is always a problem in insurance, of course: Insurance firms and their customers have asymmetrical information about the policy-holder's health. So people who know they're likely to become ill load up on more extensive coverage, while people who're more confident about their health stick with stripped-down plans. Which, in turn, drives up the cost of covering the people remaining in the more robustly covered pool, increasing premiums and magnifying the effect still further by driving out healthier customers at the margin. Genetic screening, of course, makes the problem far more acute. Maybe that's not a knock-down argument against legally entrenching this information asymmetry by barring insurers' access to genetic information (though I think it's a pretty good one), but it's just plain bizarre to see a treatment this length that doesn't even acknowledge the problem.

My second beef is that this piece—like many others—seems to operate on a strange conception of what "insurance" is supposed to do. Insurance is about spreading risk—which is why you can't generally buy fire insurance after your house burns down. If you already know you've got a disease, you don't need insurance; you just need health care. If the known risk of some condition manifesting in some individual is, say, 80 percent, and you require it to be covered as though it were 3 percent, I think it's fair to say you're no longer really talking about "insurance" in any terribly meaningful sense. What you're actually doing is using a private insurer as cover to create a health care subsidy.