DNA – Crack the Code by Nyla

Protecting Our Personal Information.

In 2008, President George W. Bush signed into law the nearly unanimously approved Genetic Information Nondiscrimination Act of 2008 (GINA). This law is meant to prevent discrimination in employment and health insurance based on genetic information. The law effectively prevents group health plans and employers from requesting that individuals undergo genetic tests, thereby protecting what many view as basic human rights: healthcare and equal employment opportunity. While the GINA of 2008 prevents the use of genetic information with health insurance, it does not prevent the use of genetic testing in other arenas, such as life insurance.

Life Insurance: A Product in a Competitive Market.

With life insurance, an insurer agrees to pay a designated amount of money in response to the death of the policy holder. In return, the policy holder must pay a premium in regular intervals throughout the course of the policy. Accordingly, the insurance company charges a premium based upon a detailed underwriting and actuarial process.

Mortality rates for different age groups are used in determining an individual’s premium. For instance, it is predicted that 0.35 in 1000 non-smoking 25 years old males will die in the first year of policy coverage. This allows the insurance company to charge premiums to a group of individuals given an expected number of deaths and payouts.

Individual life insurance premiums are determined in an underwriting process. During this process, age, health, and tobacco use are the major factors that play into premium determination. However, more detailed questions about the health and lifestyle of the client are often asked to make a better judgement what type of premium would be required for that person. For older applicants, paramedical professionals are sent to perform more detailed tests including blood and urine tests.

What are they looking for in the blood test? Right now, the blood test screens for the presence of antigens to the HIV  virus, hepatitis, evidence for liver or kidney disorders, and certain types of autoimmune diseases. These are all increased risk factors for mortality. A positive test for one or more of these indicators may result in higher premiums or denial of coverage.

Enter genetic testing.

The blood test performed by the paramedic is all that would be required for a complete genome scan. This type of test can detect predispositions to over 100 complex genetic diseases such as Alzheimer’s Disease, Parkinson’s Disease, Heart Disease, and many different types of cancers. What would happen if insurance companies used genetic information in the underwriting process?

Genetic information will add an array of new dimensions to the current underwriting process as it allows insurers to account for a plethora of diseases beyond a typical life insurance exam. Moreover, a genetic test can show increased risk, normal risk or decreased risk for a particular disease. It is possible that this information may improve the likelihood of coverage and/or lower premiums for individuals.

The use of genetic information may be a disgusting thought in some peoples’ minds, but we must consider what happens if we ban the use of genetic information in life insurance. An individual may always get himself tested. What if a 50 year old male learns that he has an increased risk for three different late onset genetic disorders and decides to take out a large policy anticipating this decline. This “moral hazard” will cause the insurance company to charge a lower premium than what is actuarially fair, and it will begin to lose money for every individual that engages in this behavior. Eventually, it will prevent the proper functionality of the life insurance company, and it will disadvantage everyone who seeks to take out a life insurance policy.

To Know or Not to Know? That is the Question.

There are two issues at play with life insurance and genetic testing: protection of personal data, and avoiding a situation where there is asymmetry of information. If the consumer knows of a predisposition and the insurer does not, the consumer has the power to take out a policy at an actuarial loss to the insurer. However, some may believe that the insurer should not ever know about the consumer’s genetic information because that is both private and immutable material. What is the optimal solution here?

One solution would be to ban genetic testing altogether. We might decide not to let the consumer or the insurer employ this technology. I think this would be terrible. We would be taking several steps backwards if we decided to ban genetic testing.

Another solution is for knowledge to be spread all around. Life insurers should be allowed to use genetic information as long as the consumer is made aware of the results. This way, there is no asymmetry of information. Let’s not forget that genetic testing could even reveal a genetic protection against certain diseases (lower than average risk).

I do not believe that applying genetic testing towards life insurance is a violation of privacy or human rights. Life insurance is not a societal right. It is a product that consumers have the option of buying. If a consumer does not want to have their genes tested, then perhaps they should reconsider taking out a life insurance policy.

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