Hektore

I have a human physiology course right now, and in the associated lab we had a discussion about the human genome project and genome sequencing. Our professor brought it to out attention that in the next 5-7 years it's expected that individuals will be able to get their entire genome sequenced for only a few thousand dollars (less than 10). While that is still a high price, it is far from unreasonable and expected to continue to fall because of higher availability in the years after that. What I want to know is what you all think this will do to the health insurance industry.

Right now it is known that about 20% of people incur 80% of all medical expenses. The way insurance works is they don't know who falls into which category, so they charge everybody enough to pay everybody's bills (plus profit). There are questionaires about family/medical history and things like that to aid them in predicting which group you will fall into but they can't be certain now. However, there is a very real chance that within a decade, with a single test they will be able to place you with virtual certainty into the 80% of 'good' customers or the 20% of 'bad' customers. This means they can deny you insurance if you are certain to be too high a risk, or at best charge you extraordinary sums of money to have insurance.

My prediction is a pretty big collapse of the insurance industry. Those of us that fall into the 80% who have greater than a 99% chance of never racking up huge medical bills should be able to manage on our own until we start to get up there in years. The majority of people who pay insurance and keep the industry going will no longer be willing to do that, since the amount of medical bills they will be liable for in their young, healthy life will be very small. So there won't be anyone to pay the bills for those that need the money, besides themselves so they won't need insurance either, since they're footing the whole bill either way.

You are welcome to have the "Gattaca" debate as a closely related issue to this is that it will also be cheap and easy to screen embryos prior to in-vitro fertilation, but there are other threads more related to that already. Keep in mind what I'm talking about here is not genetically engeneering the perfect human(whatever the hell that is), but selection from your own genes for the least chance of gene-related illness in future children as well as likelihood of illness for those of us already born who inherited our genes the old fashioned way and the impact that will have on health insurance and healthcare in the future.

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The advantage law is the best law in rugby, because it lets you ignore all the others for the good of the game.

Ourcrazymodern?

The profitability of life is its being. Insurance is like a vampire.

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The_Jazz

You had me up to right there.

First, it's possible that this will devastate the health insurance industry. The rest of the industry (life, property, casualty) will be just fine.

Second, and most importantly, the health insurors are very smart. You don't build a multi-billion dollar industry by being anything but smart. That said, I think that some insurors are screwed if they don't jump on the bandwagon quickly.

Here's my prediction: the health insurers will start requiring genome sequencing once the price sinks below $1,000 per test. However, that won't matter in group plans. Group plans are already based on the 80/20 rule, and they're usually priced on what has been paid over the last few years for the group's coverage. Those group plans will keep being priced the same way because there's no way to filter out the 20% from an employer.

Individuals will be a much bigger problem. What's most likely to happen is a few people will get either cancelled or denied and the state legislatures will get involved. They'll most likely make it illegal for insurers to cancel coverage for someone, which will be fine for people who already have coverage but bad for those that don't.

Honestly, it's most likely going to lead to universal healthcare, but not for 20+ years. The technology isn't there yet, and neither is the cost. Once those happen, we're still 10 years away.

Or a prudent thing to buy if you don't have a crystal ball. We all expect the other guy to have insurance and no one ever does anything wrong.

Sorry, but I've got a million examples of why insurance is absolutely necessary in today's world. Health insurance is a pain, but insurance generally is a very good thing. Show me somewhere else where you can pay $500 to get $1M.

__________________
"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin
"There ought to be limits to freedom." - George W. Bush
"We have met the enemy and he is us." - Pogo

Pham

Although you could screen for certain hereditary diseases, genome sequencing (even if cheap and with perfect results) won’t be a reliable way of screening customers for health insurance companies. There are just too many other factors that affect overall health more than your genes, i.e. lifestyle choices and diet. So I doubt cheaper and better genome mapping techniques will affect the health insurance industry much.

On a side (irrelevant) note, the human genome project used samples from a large number of donors – this is not a problem since the margin for error is greater than the individual variation in the genome.

Hektore

Sorry, I meant effects specific to health insurance, I realize this will likely not affect other insurance types.

The problem with saying it won't affect employees insurance is that many employers are dropping insurance coverage for employees. As part of our lab, we read a very interesting article from the New Yord Times about how one of the largest reasons the number of uninsured are rising in this country is that employers, who used to be the main method of individual obtaining health insurance, are dropping insurance benefits.

Individuals are more frequently having to obtain their own insurance which allows insurers to screen and increase costs based on lifestyle choices, which is already happening. With the advance of sequencing technology both lifestyle and genetics are going to be taken into consideration making already expensive and difficult to obtain insurance, for those at high risk, even more expensive and less attainable.

Even if they manage to pass a law preventing insurance companies from dropping current customers because of increased risk for certain disease, are they also going to set prices for those companies? Without price control the only thing they are going to have to do is make it more expensive than the person can afford, of if they can still afford it charge enough money to make up the difference.

I don't understand why we have to wait until it's a serious problem before we address it. It seems very likely the technology will be here in less than 10 years and perfectly reasonable to expect this to follow. Why do we have to wait until most people can't obtain insurance because they are being denied or it is too expensive before we make healthcare more accessible and affordable without insurance?

__________________
The advantage law is the best law in rugby, because it lets you ignore all the others for the good of the game.

ubertuber

One weakness in your hypothesis is that not all health insurance costs are genetically predicted. I could have outstanding genes, but if a drunk driver crashes into my car, I'm screwed. That's one reason I carry health insurance. There will be some people in the mythical 80% that might try to drop their insurance, but I predict the majority would remain in plans - particularly if they were considered to be their own class by insurance companies.

The_Jazz - I think that your point about universal coverage is a great conjecture.

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The_Jazz

Price control has been tried in other parts of the insurance industry, most notably wind coverage in Florida and earthquake and workers compensation coverage in California. The results are disasterous, every single time. It doesn't work because there's no way of predicting the future. What is a winning formula today is almost certainly a recipe for bankruptcy tomorrow.

That's why universal healthcare is a much more likely result than price controls.

That said, there was an article yesterday in one of the online insurance journals that addressed exactly this issue. There is legislation going through Congress right now to stop this kind of "cherry picking". It's already being addressed.

As far as employers dropping health care coverage, I don't think it happens at nearly the scale that you seem to. For one thing, it opens the company up to management liability issues, and I know of at least a couple of cases of this nature that were settled for the plaintiffs.

Uber - do you mean "great conjecture" as in it's logical or "great conjecture" as in I'm making too many leaps to get there?

__________________
"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin
"There ought to be limits to freedom." - George W. Bush
"We have met the enemy and he is us." - Pogo

Ourcrazymodern?

Who takes from others?
Who profits off their foibles?
Imaginary things.

__________________
BE JUST AND FEAR NOT

flstf

I think medical insurance companies should be able to charge genetically superior people less if they can show that they have less claims as a group. I also think universal healthcare is inevitable simply because the cost is so high and rising for everybody.

But until then the human genome may turn out to be an excellent way to predict costs. As long as healthcare insurance is a "for profit" business, they should be able to use this tool along with age, race, sex, lifestyle choices, etc..

kevpdx

Uber is right, most of my medical costs are spent on non genetic issues.

The_Jazz

fistf, I agree with you up to the idiot point - I'd link to some fool skateboarding off a building or some other similarly stupid stunt, but I don't have the energy.

The problem with using the genome method is that it won't be useful in group policies, which is by far the most popular form of health insurance. It's impractical from a legal standpoint for insurers to pick and choose who they'll accept within an employer's talent pool. If it started to happen, the states would make it illegal pretty damn fast.

__________________
"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin
"There ought to be limits to freedom." - George W. Bush
"We have met the enemy and he is us." - Pogo

hiredgun

Agreed with ubertuber: I don't think that we'll see a mass exodus of 'healthy' individuals from health insurance. Accidents make up a very significant portion of unexpected healthcare costs, and people are still going to want coverage for those.

I do think that The_Jazz may be onto a possible long-term trajectory. The new availability of more 'perfect' information in a market that has survived on uncertainty will lead businesses to practice more perfect price discrimination, an outcome that I think society will find morally unsustainable - those who most need healthcare will have the hardest time getting it (on a scale that dwarfs any similar effect in our current system), and the system will be forced to respond. One response would be to eliminate price discrimination altogether - from there it's not a large leap to a single-payer universal healthcare system.

braisler

There have already been cases of women refusing to be screened for a known gene that predicts breast cancer because they are concerned that the health insurance companies might get the information and drop them from coverage. BRCA1 is just one example. The genomics research community is discovering new gene/disease associations more rapidly every year. Within the last year, two different genes have been shown to have association with age-related macular degeneration. This is a very powerful tool in the treatment and diagnosis of disease. Still there is a great fear about using this tool since the insurance industry would certainly want to use it to increase their bottom lines.

I think that a key issue here is personal control of information. There are already some efforts to control who has access to patient information and when (HIPAA, meant to protect patient privacy but also, I think, an anti-insurance spying tool). Insurance companies should never have direct access to patient's confidential information and this would include the results of any genetic tests. It is already pushing the issue to ask a patient to fill out a screening form before offering coverage. Yes, you can refuse to answer, and they can refuse to cover you.

I am a scientist. It is difficult for me to see what could be such a potent and powerful tool for the better being debated about what would happen to the $$$ of insurance companies if they got the information. I don't have a ready-made solution for how to solve this. Of course, I can do my own genetic screening in my lab, so no one but me would know the results. I'm talking about single or several gene screening here. It is pretty easy. Takes 2-3 hours and costs about $25. Whole genome scanning is still a few years off from being universally affordable. A genomics colleague says that it should be under $1000 within 10 years.

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You do not really understand something unless you can explain it to your grandmother.
- Albert Einstein
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Ourcrazymodern?

"Insurance" makes stuff up for "money".
"Lies" compounded = what?
Unsustainable hasn't happened, but it should have since we can't sustain it.

__________________
BE JUST AND FEAR NOT

The_Jazz

[sigh]

Insurance makes nothing up. Insurance protects assets and transfers risk.

There are no lies.

There is no deceit.

Health insurance specifically spreads the risk of one individual among many others. Should you be in a catastrophic accident, my premiums will pay your bills. If you get cancer, my premiums will pay your bills. If I have surgery, your premiums pay my bills. We should all avoid financial risk where there are no positives, only negatives.

If your house burns to the ground, my premiums help rebuild it and replace everything inside.

If your dog attacks and paralyzes a child, my premiums pay for your liability.

Don't attack what you don't understand, especially if it is something absolutely necessary in today's world. If you don't agree, then do not get behind the wheel of your car. Or own a house. Or start your own company and have employees.

__________________
"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin
"There ought to be limits to freedom." - George W. Bush
"We have met the enemy and he is us." - Pogo

flstf

As I recall when I was still working we had to answer questions about age, smoking, weight, etc..for employer provided insurance but maybe that was more for disability or life insurance. Stll, I don't see why it would be too difficult to group people by risk and still get an employer negotiated group rate for health insurance. Don't some companies require you to pay more if you smoke, for instance, even if you are getting the group rate?

The_Jazz

No, everyone in a group health plan is supposed to pay the same rate. That's really the point of it, and honestly it's why it's sometimes better to work for a bigger company - you'll pay less. One reason is that many large employers tend to self-insure the first portion of the claims and buy coverage for anything that gets over a certain amount.

The questions on health forms are usually to make sure that the employer/insurance company aren't picking up prior conditions, like if you have a bad back or cancer. In those kinds of cases, it usually becomes a battle over who's going to pay, unfortunately.

__________________
"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin
"There ought to be limits to freedom." - George W. Bush
"We have met the enemy and he is us." - Pogo