The Economist frets about the coming revolution in health insurance. Cheap and widespread genetic screening, it claims, will result in discrimination based on predisposition to disease. This seems a very odd thing to be worried about. Knowing an individual’s disease risk doesn’t change the overall prevalence, so the total amount of insurance required is not going to rise. If anything, it will fall slightly as the margin of error in guessing one’s risk of disease is tightened. What we will see is a redistribution of the insurance burden, with the genetically fortunate buying less while the unlucky buy more. This is unfortunate for some, but as Mankiw and others have pointed out there are so many other genetic predispositions to wealth; there is no obvious reason to pick on only those traits which happen to fall within that loosely defined category of ‘disease’.
For those who think this is a little callous, take heart. More costly insurance is a powerful incentive for the market to provide sufferers with cures (or better, preventative treatments) for the most serious aliments. Indeed, a well-informed insurer has a great incentive to do everything it can to prevent a disposition becoming a disease. It seems the only people who have anything to lose from genetic screening in the long run are the insurance companies.
That seems odd that a market will somehow invest more in discovering cures with a reduction of patients that require such cures. Surely a well informed insurer has great incentive to simply rack up the prices of their services to the genetically underprivelledged.
Let’s not also consider the other services that vary based on genetic screening a la Gattaca who honed the point down. Shall we allow genetic information become open information?
James:
Yes, a well informed insurer will increase the cost of insurance for someone with a high genetic disposition to disease – just as an auto insurer charges higher premiums for younger people who are more likely to have accidents. The incentive to find cures will come from this higher price. When insurance for people who have a high disease risk is distorted downwards by lack of information, as is the current situation, it is cheaper to be insured then to prevent the disease. When a person’s individual risk is known, the price of insurance will more closely reflect the true cost of the disease, including personal pain and suffering (as insurance payouts go, in part, towards alleviating pain). If the price of insurance goes up, treatments which were previously too expensive by comparison will become viable options.
And the GATTACA situation scares me too. Great music in that movie though