Should Insurers Be Forced To Ignore Genetic Facts?

In a world where genetic testing is continually becoming more reliable and affordable, many people are wary of finding out their genetic makeup because they fear insurance companies will ask for the results. If your test shows that you are at high-risk for developing a disease, like Alzheimer’s, insurance companies may charge you higher premiums or may even decide that you pose too great a risk and turn down your application for coverage.

Federal law already bans health insurers from factoring in the results of genetic testing, but life, disability and long-term care insurers are still free to do so in most states. The New York Times hosted an online debate recently about whether these insurers should also be outlawed from considering this information when deciding what kind of coverage, if any, they can offer you.

Here’s my take:

1. Insurance companies, like any business, have the right to sell their products on their own terms. If Company A is offering coverage on terms you don’t find agreeable (e.g, that you must submit the results of any genetic testing you’ve had done), you are free to take your business elsewhere (according to the New York Times report I reference above, at least twelve insurers “ask no explicit questions about genetic testing”). But those who do find Company A’s terms acceptable should be left free to buy its policies — the government has no business interfering with this trade.

2. It’s a fact that certain people, due to their genetic makeup, are more likely to develop certain medical conditions than others. Forcing insurers to turn a blind eye to this reality just means that they can’t charge these individuals for the higher medical costs they will incur. As a result, lower-risk individuals will be required to pick up the bill.

For example, as I’ve previously written, people who test positive for genetic markers suggesting they’ll develop Alzheimer’s in old age are 50% more likely to enter nursing homes, which long-term care insurers must pay for. If insurers are forbidden from charging these individuals higher premiums, those less likely to develop the disease will be forced to pay higher premiums to make up the costs.

The government shouldn’t be forcing people to foot the medical bills of others.
As I detailed in a paper earlier this year, government regulations already distort health insurance in many ways for this purpose, and the result has been the destruction of this market. (No, insurance is
not inherently a scheme by which people subsidize the expenses of others. The purpose of insurance is to manage your individual risk. Regulation has turned insurance in certain markets, like health care, into a tool for the government’s wealth redistribution schemes.)