Genomes and Insurance

Ezra Klein:

In 2008, Congress overwhelmingly passed, and President George W. Bush signed, the Genetic Information Nondiscrimination Act. Ron Paul was the lone dissenter. The legislation bars insurers from denying coverage or raising premiums on individuals who show a genetic predisposition toward particular diseases. And in doing, it armed a time bomb beneath the health-care industry.At the moment, our understanding of the genome remains relatively crude, and our ability to predict future health risks based off of genomic sequencing is limited. But we’re getting better at it. For instance, women in families with a high rate of breast and ovarian cancer can have themselves tested for alterations in the BCRA1 and BCRA2 genes. If they test positive, it means their risk of developing breast or ovarian cancer is significantly higher.

As we sequence more genomes, mine more data, and conduct more studies, we’ll find a lot more of these connections. Eventually, genomic testing will be a powerful predictor of future illness. And it raises the potential that young people will get themselves tested and then purchase insurance based off the result. So those with a clean genomic result might go for a cheap catastrophic plan, while those with a high risk of developing pricey illnesses will opt for more comprehensive insurance.

The result would be, in insurance terms, an “adverse-selection death spiral,” as the healthy opt out of expensive insurance, the sick opt into it, and premiums spin out of control.

“For all of human history, humans have not had the readout of the software that makes them alive,” Larry Smarr, a member of the Complete Genomics scientific advisory board, told The New York Times. “Once you make the transition from a data poor to data rich environment, everything changes.”

The policy that solves this problem is an individual mandate, or Medicare-for-All, or some other approach that forces the healthy to insure themselves alongside the sick. In its absence, there’s no way to make a risk-selection model work for the health insurance industry, as consumers will be armed with detailed information about their health risks that insurers are legally prohibited from pricing into their insurance premiums.