Insurance Underwriting and Healthcare Limbo

Baring our Genomes to Insurers

“As medieval European Christians feared to have their souls bared for public examination, lest they be suspected of heresy, so modern, secular Westerners fear the baring of the nearest thing to their individual essences that science has come up with: their genomes.” – The Economist, August 2007

As the article correctly suggests, the public’s preoccupation with their genetic information as it relates to their insurability reflects a deep concern of life-altering discrimination based on immutable characteristics. If a person bares their “soul” by taking a genetic screening test and discovers the existence of a genetic disorder, they may be subject to insurance underwriting which increases the premium, excludes certain medical conditions from coverage, or shortens the benefit period. Despite this clever analogy, the article’s conclusion (an eventual system overhaul) leaps over the public’s very real concerns regarding coverage during the transition to a reformed insurance industry.

A False Sense of Confidence: Underwriting with Imperfect Facts

The principle of individual underwriting relies on assessing future risk to determine eligibility and rates. These have traditionally been based on imperfect or external factors rather than highly certain predispositions. Several opponents of genetic exceptionalism, such as Mark Rothstein (35 J. Law. Med. & Ethics 59 (2007)), argue that genetics serve as an imperfect predictor of health. They remind us that the interplay between a genetic predisposition and environmental factors will affect a disorder’s severity and manifestation. Rothstein proposes a general increase in the privacy of health information rather than separately regulating genetic information.

Until Reform: Assessing the Current Legal Framework and Possible Effects

Although idealistic, waiting to pass a more perfect and encompassing federal regulation relating to information privacy in these contexts will not adequately address shortcomings in our current treatment of genetic information in the insurance arena. While no federal law exists to prohibit this practice by health insurance companies, state laws offer disparate protections and are widely misinterpreted. Several states expressly differentiate between health, disability, or life insurance, allowing discrimination for some coverage based on sound actuarial principles. If, at the same time, insurance companies and others misinterpret the significance of genetic test results, this confusion, as Hsien-Hsien Lei of Eye On DNA reminds us, would not be good news for future of predictive health care.

Despite the fact that genetics may serve as an imperfect proxy to assess future risk, insurance companies’ business interests dictate the compilation of as much information as possible to assess risk occurrence. Although no insurance companies currently require applicants to submit genetic tests for underwriting purposes, Nancy Kass and Amy Medley (35 J. Law. Med. & Ethics 66 (2007)) suggest that future insurance companies may adopt these procedures. A Kaiser Family Foundation Study conducted in 2001, which reported insurance company responses to hypothetical applicants, suggests that applications with a high predisposition to severe incurable illness would result in complete coverage denial. In such a scenario, as David P. Hamilton at VentureBeat suggests, individuals may be relegated to profitable and unprofitable segments. On the other hand, integrating genetic tests in the risk-rating process may eventually reach a status quo--that is, all individuals are predisposed to some illness or condition and coverage will eventually disperse.

While waiting for the hypothetical day in which insurance coverage (post-genetic testing) returns to status quo, state laws that allow underwriting (either by statute or via absence of legislation) based on an individual’s genetic information in any insurance context must be re-examined. Should we be concerned that a risk-calculating business may formulate assessments based on such imperfect data and with such severe consequences? Current legislative status suggests that insurance companies have no legal duty preventing them from using genetic information or perceived genetic characteristics as a basis for coverage, benefits, or denials in some contexts. Although no cases exist to document conflicts related to insurance, several notable cases in the employment context suggest it is imperative for the law to recognize a duty and a remedy to potentially injured individuals. Without the legal recognition of such rights, courts' conservative jurisprudence could prevent any legal remedy by dismissing plaintiffs’ claims. In such a context, health care and insurance consumers would sink from the medieval limbo The Economist describes to dire region of despair. -- K.D.