Monday, September 24, 2007

Hilary fails micro

On genetic testing in insurance:

"And everyday they deny people coverage because of pre-existing conditions or the result of genetic testing. Think about what this might mean down the road with advances in genetic testing. The vast majority of us could wind up being bad risks because genetically most of us will probably show we are susceptible to something and therefore we will become uninsurable."

Think about it a little longer. If we are all uninsurable, from whom will insurance companies make money? And is there really a risk that can't be priced?

There are very strong arguments to prevent genetic screening by insurance companies on equity grounds. Provided anti-screening regulations are enforced and 'cheaters' who screen anyway are heavily penalized, preventing screening should be profit neutral for insurance companies. Risks are spread across a broader section of the community and those who ultimately need care are able to get it. But Hilary is just plain wrong if she thinks we will all be uninsurable and the insurance companies will put themselves out of business.

Even without this problem, private health cover is a mess if it is what you are relying on to carry the weight of patients in your health system. The longer you think about it the more arguments you get for state run healthcare.

Anyone interested in further reading? The July 12 2002 issue of Science has two articles on the problem of insurance screening. Both are a little histrionic, one for and one against. At least the one against is histrionic and rational.

2 Comments:

Blogger larson_b said...

This comment has been removed by the author.

2:28 AM  
Blogger larson_b said...

what actually would be concerning is the lack of state-funded health care for those who would not receive affordable private health coverage, given their high risk status.

also. genetic testing is not a solution to inefficient insurance markets.
it would remove adverse selection from the market so that insurance co's know ex ante who they are providing coverage to, however, such testing would not remove the moral hazard problem

2:29 AM  

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