Saturday, October 15, 2005

The case for insurer sponsored genetic testing

We're living in the Brave New World of genetic testing and it will present many challenges for our society to deal with.

Two recent developments provide a backdrop for this post. First, professional basketball player Eddy Curry declined to take a DNA test requested by the Bulls as part of contract negotiations:

...Nearly six months later, after a diagnosis of benign arrythmia sent the 22-year-old scurrying to cardiologists from coast to coast and cost him the rest of the season, Curry finds himself in a fight with Bulls management his lawyer calls "far bigger than just the sports world."

At issue is the one-year, $5 million deal Chicago offered Curry, with this proviso: before he sets foot on the court, Curry must submit to DNA testing.

"Think about what's at stake here," said Alan Milstein, Curry's attorney. "As far as DNA testing, we're just at the beginning of that universe. Pretty soon, though, we'll know whether someone is predisposed to cancer, alcoholism, obesity, baldness and who knows what else.

"Hand that information to an employer," he added, "and imagine the implications. If the NBA were to get away with it, what about everyone else in this country looking for a job."

Chicago general manager John Paxson insists the Bulls can test Curry as part of a routine physical when training camp opens next week. Milstein calls that notion "flat-out wrong," and one already rejected by the players' union during the last collective bargaining agreement.

"Besides, there are privacy laws on the books, both state and federal, so there's no way they'd win," he added. "It makes you wonder what they're really worried about."
Then IBM announced a policy against genetic screening of its employees:

IBM, the world's largest computer maker, pledged Monday not to use genetic data to screen employees and applicants in what it said was the first such move by a major corporation to safeguard a new category of privacy.

Notwithstanding IBM's annoucement, the genetic testing genie is out of the bottle and we're just starting to wrestle with the implications. The issues go beyond employer/employee relations.

From a health/medical insurance standpoint insureds can't have their cake and eat it too. Specifically, having the benefits of genetic testing as a insured and then denying insurance companies the benefit of that same information. Doing so would throw the whole insurance industry out of whack.

From a public policy standpoint, attempting to legislate against insurance company sponsored genetic testing will result in either less available insurance, more expensive insurance, or both. Genetic testing is here to stay and we can no more keep it at bay than we can keep the tide from coming in.

Why? No one is proposing that private citizens not have access to self-initiated genetic testing. That being the case, put yourself in the shoes of an insurance company. A potential client comes to you and requests coverage for a medical condition for which a genetic test exists. If you were the insurance company, would you be inclined to write a policy knowing that a potential customer might have access to information that you don't have?; the results of a self-initiated genetic test?

In this scenario, you probably would opt to not offer that specific coverage unless you had access to the same information the insured would have.

Let's take the scenario where a law is passed forcing you to offer insuance and barring you from any information offered by genetic testing. More than likely, individuals will get the information from self-initated genetic tests and seek to cover any potential finacial risks by buying insurance. (Wouldn't you?) In this scenario, an insurance company would raise policy rates for everyone just to make sure it stays in business. The new across the board rates would cover the additional costs of individuals buying insurance for potential conditions that only they know about.

As usual, there is no free lunch.

But this is not a 'glass is half-empty' situation we find ourselves in. Ask yourself this question: Would you rather not know that a genetic test predicts that you're predisposed to a medical condition? The same information that might result in a higher insurance premium might also provide an opportunity to take prudent and proactive steps to address it; this is the proverbial two edge sword.

The insurance industry is constantly adjusting rates based on new information sources. A recent trend is to adjust rates based on an indivual's credit history because of the correlation of insurance claim risk to credit risk.

Information is power and society can't allow just one half of the insurance equation to benefit from genetic testing. Legislation that seeks to tip the scales against insurers will just result in higher premium rates for everyone else as insurance companies spread the costs/risks across their whole insurance pool; instead of those that actually present the risk.

Update: Genetics and Life Insurance : Medical Underwriting and Social Policy. MIT Press, 2004.

Editorial Review From the New England Journal of Medicine, March 31, 2005

The fear of genetic discrimination in life insurance pervades much of the discussion about the issue. Although editor Mark Rothstein does not ignore this fear, he has drawn together a group of authors who present intelligent and well-reasoned views of the key players in the current debate. The perspective is mainly from the United States, but the book is also relevant to other jurisdictions, since the basic concepts behind insurance, economics, and discrimination are common to many countries. The consumer often assumes that the use of genetic information by insurers can be detrimental only to those people at risk for genetic-based diseases and that, with research advances, an increasing number of people will be subjected to higher premiums or ousted from the life-insurance market. The chapters in this book written by insurance and economic analysts, in particular, tend to challenge this view. Ultimately, it is in the interest of insurance companies to be competitive in the market and to insure as many people as possible. With that in mind, there is hope that a mutually workable position can be reached between insurers and their customers. The access to health information (or a lack thereof) and the social policies involved in insurance systems are at the heart of the issue of discrimination. All of the chapters deal with these topics to varying degrees. At one end of the scale are the insurers, who claim that access to information is vital to their continued survival, and at the other end are consumers and researchers, who are keen to ensure that people do not avoid undergoing potentially lifesaving tests or participating in research for fear of being uninsurable. Several authors question the concept of life insurance as a right, rather than a privilege, raising the point that perhaps people who have testable genetic illnesses cannot participate in the same market for life insurance as people who have less problematic genomes. It is a harsh view, but one perhaps that challenges the life-insurance industry to be more creative in the design of policies. The question of whether insurance companies themselves are legally able to agree as an industry not to use genetic information in setting premiums or in making decisions about coverage is interesting. Most countries share similar notions in regard to prohibiting anticompetitive activities, with many of the prohibitions consistent with concepts in the U.S. Sherman Act. The arguments discussed here tend to favor pushing responsibility for such decisions onto legislatures, rather than allowing for self-regulation by the insurance industry. Clearly, the interests of consumers and insurance companies are unlikely to coincide completely, but such conflict is likely to exist regardless of whether we are looking at genetic information. A voice that I feel is not heard strongly in this book is that of the support organizations for people with genetic diseases. Although insurers claim that they have an adequate understanding of genetic factors, anecdotal evidence suggests an element of actuarial unfairness. Support organizations would be sufficiently well equipped to add another element to the discussion. This book is a handy and informative reference for anyone who is considering the issues related to genetic discrimination in life insurance. Rothstein's introductory chapter scopes out the issues well, and his concluding chapter clearly and concisely wraps up the various positions of the stakeholders. His advice is clear -- that the elected bodies that are ultimately responsible for reform (whatever form that may take) must look beyond simply allowing or disallowing genetic discrimination. The book's pervading message is that we have a long way to go before we can claim to have dealt with the problems surrounding genetic discrimination in life insurance. We can only hope that the governmental bodies and courts that are dealing with these issues can benefit from studying views that are as balanced and broad as those contained in this book.
Hat Tip: Genetic Screening and Life Insurance



Anonymous Anonymous said...

I'd be more sympathetic to the insurance industry if they proactively monitored (with client permission) things like credit history and LOWERED rates when it improves, as it supposedly does when tickets and accidents reach a certain age.

Otherwise, it seems a bit too opportunistic to me.

The genetic testing issue is probably a loser for people who complain about it. People who have good genetics are going to want the discounts, and the people who won't reveal their genetics are going to have to deal with higher rates. I would suggest, though, that you shouldn't have to reveal your genetics to get covered, you just have to be willing to live with the higher-rate consequences.

Oh, and if an insurance company says they have the actuarial data to support differential treatment and rates, they should be forced to reveal their proof. If they want to protect trade secrets, have them submit the data to an arbitrator who promises confidentiality.


October 16, 2005 at 1:04 PM  
Anonymous Anonymous said...


1. Insurance companies are not under any obligation to lower their rates. The free market with ultimately take care of an insurance company that prices themselves to high relative too their competitors.

2. I'm in strong agreement with you point about "willing to live with the higher-rate consequences" as long as it's limited to an single individual and not the insurance pool as a whole. My point is that single insured higher policy rates based on the results of genetic tests may be outlawed resulting in higher rates across the board.

Here's a question we will grapple with: What's the difference in making a risk assesment on genetic information we can see expressed physically (cystic fibrosis, Multiple Sclerosis, Down syndrome, etc.) and that which is discerened from genetic testing?

3. Why should insurance company's be forced to reveal any of their actuarial data to anyone, even an arbitrator? Why isn't it a simple as here's a price for coverage based on the information you provided...take it or leave it?

Would you want to set up a business where you're dictated to on how you handle your legal trade secrets?

October 16, 2005 at 1:31 PM  

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