Does Genetic Testing Doom Private Insurance?


Americans are concerned about how their genetic information might be used against them by insurers and employers. To address these fears, both the House and Senate have passed the Genetic Information Non-Discrimination Act (GINA) which outlaws such discrimination by health insurers and employers. The law does not apparently apply to long-term care and life insurers.

The idea of insurance is that people pool premiums together in order to cover unknown risks. What happens when individual risks are no longer unknown? Do better and more accurate genetic tests create the possibility of an adverse selection spiral? Perhaps. People who find that their genetic tests indicate that they have a much higher risk of a particularly debilitating illness, say Alzheimer's disease, might load up with gold-plated insurance. As more and more high-risk people buy insurance, insurers would have to raise their rates in order to pay for their medical care. Higher rates would then discourage relatively healthy people from buying insurance which then means insurers would have to raise their rates further and so forth until bankruptcy.

The prospect of such an adverse selection spiral is not displeasing to advocates of government-supplied health care. As the New York Times reports:

It may also give ammunition to those who argue for universal health care. "Ultimately unlocking all these genetic secrets will make the whole idea of private health insurance obsolete," said Karen Pollitz, director of the Health Policy Institute at Georgetown University.

Will pervasive genetic testing ineluctably lead down the slippery slope to government medical care? I believe that one way to avoid that outcome may be mandatory private insurance based on community rating. No doubt about it, the dawning of the era of genetic diagnoses holds great promise for treating and preventing diseases but also clearly poses many policy conundrums.

Disclosure: Even before GINA passed, I sent my DNA into 23andMe for testing. Look for a future reason article in which I reveal all of my genetic flaws.