Lecture 5: Health Care and Insurance

Lecture 5 Health Care and Insurance: mutual uncertainties, the casino analogy and how it relates to risk scores and shareholders ● If know medical future, then young people won't buy insurance but old sick people will ● If insurance company knows, then they will charge a lot of money if knows you are unhealthy -> place bets on health outcomes so that average person pays more than they get out ● Individuals place only 1 bet so pay a premium cost to avoid costly events they can't afford ● Risk facors can predict risk, but companies make money when this risk is aggregated ○ Indicators of future health, genetic makeup Genetic Information Non-Discrimination Act of 2006 (GINA): insutance concept based on mutual uncertainty What is GINA? ● Title 1: Prohibition of Genetic Discirmination in Health Insurance ● Title II: Prohibition of Employment Discrimination on the basis of genetic info ● Amended existing federal law and strengthened protections from the ADA and HIPAA ● Prior to GINA, most states prohibited genetic discirmination in health insurance (determining insurability, risk classification or pricing, mandatory acquisition) forced to provide uniform standards Why GINA? ● Launch of 1990 human genome project provided impetus for seeking state and federal protection against genetic discrimination (compelling interest from congress to prohibit its practice in employment and health insurance) ● Gina was made in rsponse to potential fear (not in response to a wave of discrimination ○ Section 2(5) of GINA federal legislation "is necessary to fully protect the public from discrimination and allay their concerns abotut he potential for discrimination, thereby allowing individuals to take advantage of genetic testing, technologies, research, and new therapies Health insurers in the individual market shall not 102b: require individual to do a genetic test, establish eligibility genetic ingo rules, adjust contributions based on genetic info, impose preexisiting condition exclusions based on genetic info, and request, require, purchase genetic tests/info What GINA doesn't do: ● employment provivions don't apply to employers with less than 15 employees ● Don't deparate genetic info from standard medical records. Combines genetic testing, health records, and wearable decides that track health data 9metadata) to blur the lines between genetic testing and preexiting conditions ● Doesn't cover life/disability insurance at all ● Okay to use family hisotyr to adjust premiums, a mixture of genetics and environmental generalizations applied to an indiviudal, DT is not sure this is ok The GINA Life Insurance Conundrum: ● GINA does nothing to prohibit discrimination in life, disability, long-term care insurances, mortages, commercial transactions, or any other uses of genetic info ● Effective lobbying of Insurance ○ Tense relationship with these carve outs/exemptions ○ Use of genetic info is rare but may be a legistalative target ● Life insurers could test each applicant's genetics (like blood) before writing their policy ○ If carriers do their own genetic testing, then there won't be any need for legislate against life carriers using testing to underwrite policies ○ "The carriers will know that if they take that action, legislation will follow" ○ Is it fair? Access to genetic profiles is controversial but may be necessary by the evolution and modernization of genetic testing. Can cause asymmetric info (one party to a transaction (consumers) has more info than the other party (insurers, bad for them) ○ Rising concerns and reports of genetic discrimination- -> calls for federal legislation to clean up the life insurance conundrum The Affordable Care Act (ACA) 2010 ● ACA prohibits issuers of health insurance from discriminating against patients with genetic diseases by refusing coverage due to pre-existing conditions ● ACA protects by ensuring health insurance issuers may only vary premiums based on few specfified factors (age, geograhic area) ● GINA said that certain genetic tests coudn't be used as a basis for rate adjustments and specified what was permitted ● outlined a short list of health background data that could be used to set insurance premiums based on future health risks. ● ACA strengthens GINA The Bottom Line: all insurance depends on mutual uncertainty (if you know you were going to get sick, you are more likely to buy insurance, companies less likely to want to sell it to you) but if they know your genetic predispositions, they raise premiums ● Is this fair? Do not have to report your findings to insurer, does a ban on genetic discrimination protect consumers? ● Extent depends on genetic determinism: How much does our genetic info tell us abt future health outcomes (info abt BRCA1, BRCA2, APOE4 very valuable) ● Resolve? Protect individual genetic privacy, or mandatory genetic info sharing, or less reliance on insurance? ○ Influences insurnace and policy by science Take Home Messages: ● The concept of insurance depends on mutual uncertainty, we are willing participants in a casino that must profit, or there is no health care system. ● We do not know how certain/uncertain genetic information will be in the future. ● Insurance companies value information that predicts our health outcomes. Individuals also value that information and don’t want to share it. Insurance companies are wary of an asymmetry of knowledge. ● States had varied protections. Insurance companies operate across state boundaries so federal legislation was needed. ● GINA: filled gaps from prior Federal and State laws that were intended to set aside genetic information as something that insurance companies don’t use when assessing risk. ● GINA: Employers are restricted from genetic testing and discrimination. Life/Disability insurance are not covered under GINA, but this could addressed be if companies misbehave ● The ACA refines this coverage, but gaps remain (e.g. life insurance) and consumers should know this