By: Fahd Reyaz
Genomic testing is becoming cheaper and companies are able to provide better assessments of risk for complex diseases based on an individual’s genome. As more individual’s purchase these services and have asymmetric information about their own lifestyle, environment, etc. they may consider themselves “genetically healthy” and opt into less comprehensive or lower premium insurance. On the other hand, “genetically unhealthy” individuals would opt into more comprehensive or higher premium insurance. Insurance companies would be unable to raise premiums for the “genetically unhealthy” group as a larger percentage of those “genetically unhealthy” individuals become sick relative to “genetically healthy” individuals.
An example of this is the APOE e4 variant for Alzheimer’s disease – a, from the health insurer’s perspective, expensive disease due to the need for long-term care and nursing – individuals who find out they have the e4 variant, which increases the likelihood of having Alzheimer’s disease later in life, would likely opt into more comprehensive health insurance. Insurance companies would be unable to raise those individuals’ premiums since GINA prohibits insurers from raising health insurance premiums based on genetic risk; one commentator referred to this as an “adverse-selection death spiral“.
The Affordable Health Care Act’s Individual Mandate would solve this issue since individuals, regardless of their prospective genetic health, would purchase insurance side by side. Recently the Supreme Court questioned the constitutionality of not only the Individual Mandate, but also the Affordable Health Care Act.
If the Individual Mandate is struck down while GINA is still enforceable, it seems likely to me that the health insurance industry will have to rethink how they price insurance.
Washington Post – How a $1000 test could destroy the Health insurance Industry