> Here's a hypothetical. Say 23andMe's results indicate a 30-year-old client has the three most common BRCA1 and 2 gene mutations that 23andMe tests for, suggesting high risk for breast cancer. That person might book an appointment with a doctor, an appointment she might never had made without the DNA results. The physician might recommend a mammogram, a test a thirtysomething would not normally get. In more extreme cases, such as the much-talked about case involving actress Angelina Jolie, someone with particularly alarming results might decide to get a preventative mastectomy. Insurance companies are concerned that they'll end up paying for every step.
This seems reasonable. Someone does a genetic test, gets a result, and sees a proper doctor to discuss the results. If that person has a strong family history, and has the mutated genes, they might take preventative action which imght include surgery.
Insurance companies should be paying for that.
It's not like someone's got a whole body CT scan and is then getting unnecessary tests from the uncertain results of the scan.
> At the same time, health insurers can’t increase premiums for these potentially expensive customers because of the Genetic Information Nondiscrimination Act (GINA), a law that makes it illegal to do just that. The logic goes: People don’t get to pick their genes, so it’s unfair to penalize them for the unfortunate bad luck of having a predisposition to Alzheimer’s.
I expect to see a bunch of people who don't disclose their 23andMe results and who then have their insurance cancelled.
Insurance companies have departments dedicated to finding ways to avoid paying out. See, for example, the woman who was about to get treatment for breast cancer when her insurance company cancelled, stating her undeclared visit to a dermatologist for acne several years earlier. (http://edition.cnn.com/2009/POLITICS/06/16/health.care.heari...)
The article doesn't make it very clear, but I think there are two things going on.
One is that genetic testing possibly increases the overall cost of healthcare, by introducing new tests preventive treatments that people are advised to get. Before modern cancer treatments, many cancer patients were untreatable and they died. Now there are new and expensive treatments that are worthwhile, but they cost money. So, total amount spent on treating cancer goes up. Genetic tests & subsequent tests and testaments are a new cost, that will probably increase overall medical costs and insurers liabilities. Eventually, premiums will just go up to cover this. It's a long term problem.
The second thing for insurers to worry about is information asymmetry & adverse selection.* This is a more structural problem. The more predictable future costs are, the less suitable insurance is as a way of paying for things. If you have a 1% chance of huge medical bills in the next ten years, you can pay 1% of those potential bills as a premium and get pice of mind. If you have a 50% chance of those bills, you probably can't afford the 50% premiums.
The danger to insurance companies is that people might do that before purchasing insurance and use the result to inform their purchase decision. The net result is adverse selection and fewer people purchasing insurance.
Preventative mastectomy in this specific case might actually save money. Breast cancer is not guaranteed, but the risk multiplied by the costs should work out profitably.
Also, in other countries than the U.S., insurers are supposed to maximise well being and life expectancy...
I expect to see a bunch of people who don't disclose their 23andMe results and who then have their insurance cancelled.
In the post-ACA U.S. "rescission" like this is now illegal, short of actual fraud. And it would have been illegal prior to ACA in the case of genetic testing due to HIPPA and GINA. Not that rescission was ever nearly as common as reform proponents liked to suggest.[1]
I'm not sure you understand the concern. It's really quite simple, if a consumer knows they are going to have a lot of problems in the future, they buy better healthcare and via -versa. But the insurer can't do the same - asymmetry of information. Costs go up for the insurer due to self selection. Of course then insurance plan prices go up too or just diversify and people end up just paying for what they'll probably need. Kind of takes away the point of insurance if we get really really good at genetic based predictions.
This type of conspiratorial nonsense would be thoroughly trashed here if a startup was "the big guy" in this story. Instead the nonsense flies because the FDA is the baddie here. People are just telling themselves things and don't care to find out why they took action against 23andMe in specific, or their regulatory purpose in general, mixed with generic gov't mistrust. Bring in guesses about financial benefits to larger companies and you've got a stew going.
I've had a professional relationship with the FDA for a few years. Sometimes I like what they do, sometimes I don't. I'm not going to show my hand on how I feel about them (or their 23andMe action) any more than that. Ever since the FDA sent the warning letter, the reaction online reminds me of the Pavlovian whining I hear from folks in the industry every time the FDA issues new guidance that effectively says "don't cut corners X Y and Z" regardless of the merit in the FDA decision. You'll have to forgive me if I'm unsympathetic, I read way too much of what comes out of the FDA to stomach the broad knee-jerk against everything they do, or middle management suits just looking for something to bitch about.
edit: Rolled my already not-saying-anything about the FDA back even further, I'm talking about the response: http://i.imgur.com/tAfqLKY.png
Does it harm insurance companies? Or does it in the long term harm us, the consumers?
Here's a hypothetical example: Say there's a horrific genetic condition (let's call it 'The Lurgy') that would involve lots of expensive treatment if you developed it. Now, a cheap genetic test kit comes along that can give an accurate prediction of whether or not you are likely to eventually suffer from the lurgy. What happens?
The first effect is that more people test themselves, and go out to buy quality healthcare plans if they see that they are going to get the lurgy. These people might not have otherwise bought the insurance. Result: the insurers suddenly get a much higher % of lurgy sufferers. Their costs rise, and this pushes the insurance price up. This exacerbates the problem: Non-lurgy people are less likely to buy the insurance. Worst case, the cost of insurance comes close to the general cost of treatment, meaning that the insurance is useless.
BUT: The obvious counter to this is that the insurance companies can adjust their range. They can split their insurance offerings up into two products: One that covers the lurgy, and one that doesn't. People are free to buy either. Naturally, the lurgy-inclusive policy is much more expensive. Suddenly the risk is back on to the consumers. They don't have to declare their genetic tests, and the insurers can't force them. But now they can't afford not to take the genetic test and buy the appropriate insurance (and in so doing, effectively 'declare' their genetic test results - after all, you'd buy the cheaper insurance if you could)
So the endgame is that everyone suffers. You can imagine a world where there are genetic tests for all kinds of disorders and combinations of insurance coverage that cater for all. But now the insurance pools are smaller, the uncertainty of costs is reduced, and so the insurance costs come closer to the expected costs of treatment. i.e. insurance costs are high, the insurers still profit, and the benefit to the consumer is vastly reduced.
It seems like that tone of all comments regarding "how this hurts insurance companies", fails to see a few things:
- The risk was always on the consumer, that's how insurance works. For common major ailments (breast cancer, heart attacks etc.) those are already factored in and does not change the actuarial calculations in any way.
- As far as splitting insurance coverage being an option - That's not possible, not anymore anyways. Obamacare takes care of that. If the insurance co's can't do it for pre-existing conditions (aka the insured had the condition already) there is no way they will be able to do it for this.
Also, considering:
- Insurance is already mandatory
- ACA (The Affordable Care Act) does away with pre-existing conditions and gender discrimination so these factors will no longer affect the cost of your insurance on or off the marketplace.
- You can’t be denied health coverage based on health status.
- You can’t be dropped from coverage when you are sick.
- All new plans sold on or off the marketplace must include a wide range of new benefits including wellness visits and preventative tests and treatments at no additional out-of-pocket cost
The only real result of knowing that you may be of higher risk of the lurgy, results in you using these preventative treatments, thus reducing the future costs of illness if you actually mitigate the risk/avoid the lurgy all together.
And the endgame would be that there is a higher probability that everyone wins.
Assuming the ACA is not going anywhere this can only reduce costs in the long term for both the insured and the insurers.
Does it make sense to buy insurance if you take a hypothetically accurate genetic test? The business of insurance companies only makes sense (at least to me) if we are talking about preparing for uncertain loss. But with a genetic test kit (and for argument's sake let's assume it's very accurate) the concept of "uncertain loss" flies out the window, if not at least vastly different from its current conception.
Doesn't this just mean the eventual death of health insurance completely?
I drew the opposite conclusion from your story that you did, which is most simply exemplified by your point:
> insurance costs come closer to the expected costs of treatment.
In general, insurance costs are above the expected cost of treatment (this is essential, or insurance would be unprofitable).
As such, insurance costs coming closer to the expected cost of treatment is a good thing.
If I know for sure that I will need treatment (assuming my insurer has the same information), I shouldn't seek to buy insurance.
Insurance is designed as a cover for risk - the only reason I can buy insurance at a rate cheaper than the treatment itself because of the possibility that I won't need the treatment, and the insurance company will keep the money.
Worrying about insurance companies being broke and not offering insurance is absurd. If they can't make the business model work, I am sure someone smarter will figure out a way to make the model work. That might not be you and me and the middle manager business suits at insurance company but someone will. But holding/banning the ability to know the truth about ourselves just to save some insurance business model is not right.
This article is a blast from the past. The past before having health insurance was required and when pre-existing conditions could be omitted from coverage.
The worst case scenario they used was if someone at risk for breast cancer got mammograms early. The horror, but also the cost savings from early detection! If you claim your grandmother had breast cancer you will no hassle getting a mammogram at an early age, there should be no difference if you have genetic hints at the same risk-factor. No insurer would pay for a preventative mastectomy without strong medical evidence (e.g. not just a genetic test), there's no sense in bringing up a world-famous rich actress who almost assuredly paid for her surgery out of pocket.
The most expensive thing for a health insurer is the customer who doesn't get a mammogram when she should.
Customers getting pointless preventative care such as mammograms before age 50 increases costs in two ways. First, the mammograms cost money. Second, the mammograms make the patients less healthy (via stress, unnecessary biopsies, infections caused by the biopsies, etc) which costs even more money.
Luckily Congress is looking out for women and passed a law requiring medically useless tests.
The most cost-effective medical treatments are preventative, followed by early diagnosis.
If you can't deny coverage for a pre-existing condition, or raise premiums when someone develops a new disease, you shift to reducing your cost by doing what's most effective. That's the best part of the ACA.
This is a bunch of speculative nonsense. As the article itself finally admits in the last paragraph, there are "situations in which preventative procedures lead to healthier people with lower overall health expenses". In other words, the additional care that 23andMe customers (might) request can actually help insurers. But let's not let that stop us from painting a startup David vs. BigCo Goliath story and bashing the big bad insurance companies...
Genetic information that the insurance companies cannot use to price insurance leads to adverse selection. If insurance companies were permitted to use (and demand disclosure of) genetic tests, it wouldn't affect them.
Consider a world without GINA/other regulations and with simple actuarial pricing of insurance. Say you have a 1 in 100,000 risk of a disease costing $10k before a genetic test. After the genetic test, you risk is either 1 in 1,000,000 (if negative) or 1 in 10,000 (if positive). The insurance company would charge you $1.10 for a policy if untested, $11 for a policy if tested positive, and $0.11 for a policy if tested negative. These policies result in a 10% profit per person (ignoring admin costs, etc). If you lie about getting tested, that's grounds to revoke your policy.
As a result of GINA, people can get tested but the insurance company can't price insurance accordingly. As a result, the people with a negative test will drop coverage while people with a positive result will buy it, and prices will have to go up. If everyone behaved this way, then P(disease|buys insurance) = 1/10,000 in spite of the fact that P(disease)=1/100,000. Prices will rise to $11.
Price increases will reduce the quantity purchased (resulting in lower profits) and result in political/regulatory pushback.
When I see questions like this, I often wonder if the person asking the question is from Canada (or some other country with a halfways sane health insurance system)
Many people (most?) would not have purchased health insurance when they were young and healthy, and they certainly would never purchase long-term care insurance.
Those people who get Health Insurance typically either get it as part of a Group Insurance Plan from a company (in which case, they insurance company gets a nicely mixed up group of healthy and unhealthy people).
With systems like 23andMe - otherwise healthy people now start loading up on various kinds of insurance, with a greater chance that the Insurance Company will have to pay out on the policy. It's somewhat like someone having advance notice of an arsonist in the neighborhood loading up on fire insurance. No guarantee that you will use it - but a much better chance than average.
>23andMe’s tests, designed to tell people if they're at risk for certain health conditions, could lead to an increase in care--necessary or not--which insurers could end up covering
No, you have it wrong. Early detection _generates_ them money, since they can mark up your insurance fees.
Whoever reads this, be careful before having your DNA tested. In some countries (as, for instance my native Germany) you have the legal obligation (!) of sharing any relevant results with insurers before buying insurance.
once the tech is solid I am 100% sure health insurance companies will ask (probably not mandate due to human rights) their customers to do this and give them a financial incentive as such.
Just another reason why private health care as default is a broken concept. It is already broken from an human standpoint as it makes people in a very hard moment of life to care about money, and the more it will be possible to predict illness in general, the more broken it will be for the reasons expressed in the article.
>At the same time, health insurers can’t increase premiums for these potentially expensive customers because of the Genetic Information Nondiscrimination Act (GINA), a law that makes it illegal to do just that.
Wth? Do people not understand the point of insurance?
This also stifles innovation since they would otherwise have an incentive to invest in this technology. And more importantly it would save people's lives if the insurance made them take tests and caught this stuff early.
Health insurance is the obvious dinosaur. It has no place in modern society, except perhaps for cosmetic surgeries. People should get all the medical treatment they need, full stop.
If we still have private health insurance in 2050 then we have failed, and society will probably be like in that rock opera, "Repo! The genetic opera."
Also, we all know that they'll be the first ones to use genetic data against people.
What's the tldr? Can't be bothered to watch a video of someone talk when it could as well be written down. My ability to skim or parse a written page is significantly faster.
[+] [-] DanBC|12 years ago|reply
This seems reasonable. Someone does a genetic test, gets a result, and sees a proper doctor to discuss the results. If that person has a strong family history, and has the mutated genes, they might take preventative action which imght include surgery.
Insurance companies should be paying for that.
It's not like someone's got a whole body CT scan and is then getting unnecessary tests from the uncertain results of the scan.
> At the same time, health insurers can’t increase premiums for these potentially expensive customers because of the Genetic Information Nondiscrimination Act (GINA), a law that makes it illegal to do just that. The logic goes: People don’t get to pick their genes, so it’s unfair to penalize them for the unfortunate bad luck of having a predisposition to Alzheimer’s.
I expect to see a bunch of people who don't disclose their 23andMe results and who then have their insurance cancelled.
Insurance companies have departments dedicated to finding ways to avoid paying out. See, for example, the woman who was about to get treatment for breast cancer when her insurance company cancelled, stating her undeclared visit to a dermatologist for acne several years earlier. (http://edition.cnn.com/2009/POLITICS/06/16/health.care.heari...)
[+] [-] netcan|12 years ago|reply
One is that genetic testing possibly increases the overall cost of healthcare, by introducing new tests preventive treatments that people are advised to get. Before modern cancer treatments, many cancer patients were untreatable and they died. Now there are new and expensive treatments that are worthwhile, but they cost money. So, total amount spent on treating cancer goes up. Genetic tests & subsequent tests and testaments are a new cost, that will probably increase overall medical costs and insurers liabilities. Eventually, premiums will just go up to cover this. It's a long term problem.
The second thing for insurers to worry about is information asymmetry & adverse selection.* This is a more structural problem. The more predictable future costs are, the less suitable insurance is as a way of paying for things. If you have a 1% chance of huge medical bills in the next ten years, you can pay 1% of those potential bills as a premium and get pice of mind. If you have a 50% chance of those bills, you probably can't afford the 50% premiums.
*http://en.wikipedia.org/wiki/Adverse_selection
[+] [-] yummyfajitas|12 years ago|reply
The danger to insurance companies is that people might do that before purchasing insurance and use the result to inform their purchase decision. The net result is adverse selection and fewer people purchasing insurance.
Explanation of the math here: https://news.ycombinator.com/item?id=6807426
[+] [-] bayesianhorse|12 years ago|reply
Also, in other countries than the U.S., insurers are supposed to maximise well being and life expectancy...
[+] [-] twoodfin|12 years ago|reply
In the post-ACA U.S. "rescission" like this is now illegal, short of actual fraud. And it would have been illegal prior to ACA in the case of genetic testing due to HIPPA and GINA. Not that rescission was ever nearly as common as reform proponents liked to suggest.[1]
[1] http://healthblog.ncpa.org/rescissions-much-ado-about-nothin...
[+] [-] randyrand|12 years ago|reply
[+] [-] forgottenpass|12 years ago|reply
I've had a professional relationship with the FDA for a few years. Sometimes I like what they do, sometimes I don't. I'm not going to show my hand on how I feel about them (or their 23andMe action) any more than that. Ever since the FDA sent the warning letter, the reaction online reminds me of the Pavlovian whining I hear from folks in the industry every time the FDA issues new guidance that effectively says "don't cut corners X Y and Z" regardless of the merit in the FDA decision. You'll have to forgive me if I'm unsympathetic, I read way too much of what comes out of the FDA to stomach the broad knee-jerk against everything they do, or middle management suits just looking for something to bitch about.
edit: Rolled my already not-saying-anything about the FDA back even further, I'm talking about the response: http://i.imgur.com/tAfqLKY.png
[+] [-] naterator|12 years ago|reply
[+] [-] joosters|12 years ago|reply
Here's a hypothetical example: Say there's a horrific genetic condition (let's call it 'The Lurgy') that would involve lots of expensive treatment if you developed it. Now, a cheap genetic test kit comes along that can give an accurate prediction of whether or not you are likely to eventually suffer from the lurgy. What happens?
The first effect is that more people test themselves, and go out to buy quality healthcare plans if they see that they are going to get the lurgy. These people might not have otherwise bought the insurance. Result: the insurers suddenly get a much higher % of lurgy sufferers. Their costs rise, and this pushes the insurance price up. This exacerbates the problem: Non-lurgy people are less likely to buy the insurance. Worst case, the cost of insurance comes close to the general cost of treatment, meaning that the insurance is useless.
BUT: The obvious counter to this is that the insurance companies can adjust their range. They can split their insurance offerings up into two products: One that covers the lurgy, and one that doesn't. People are free to buy either. Naturally, the lurgy-inclusive policy is much more expensive. Suddenly the risk is back on to the consumers. They don't have to declare their genetic tests, and the insurers can't force them. But now they can't afford not to take the genetic test and buy the appropriate insurance (and in so doing, effectively 'declare' their genetic test results - after all, you'd buy the cheaper insurance if you could)
So the endgame is that everyone suffers. You can imagine a world where there are genetic tests for all kinds of disorders and combinations of insurance coverage that cater for all. But now the insurance pools are smaller, the uncertainty of costs is reduced, and so the insurance costs come closer to the expected costs of treatment. i.e. insurance costs are high, the insurers still profit, and the benefit to the consumer is vastly reduced.
[+] [-] bushido|12 years ago|reply
- The risk was always on the consumer, that's how insurance works. For common major ailments (breast cancer, heart attacks etc.) those are already factored in and does not change the actuarial calculations in any way.
- As far as splitting insurance coverage being an option - That's not possible, not anymore anyways. Obamacare takes care of that. If the insurance co's can't do it for pre-existing conditions (aka the insured had the condition already) there is no way they will be able to do it for this.
Also, considering:
- Insurance is already mandatory
- ACA (The Affordable Care Act) does away with pre-existing conditions and gender discrimination so these factors will no longer affect the cost of your insurance on or off the marketplace.
- You can’t be denied health coverage based on health status.
- You can’t be dropped from coverage when you are sick.
- All new plans sold on or off the marketplace must include a wide range of new benefits including wellness visits and preventative tests and treatments at no additional out-of-pocket cost
The only real result of knowing that you may be of higher risk of the lurgy, results in you using these preventative treatments, thus reducing the future costs of illness if you actually mitigate the risk/avoid the lurgy all together.
And the endgame would be that there is a higher probability that everyone wins.
Assuming the ACA is not going anywhere this can only reduce costs in the long term for both the insured and the insurers.
[+] [-] jckt|12 years ago|reply
Doesn't this just mean the eventual death of health insurance completely?
[+] [-] ronaldx|12 years ago|reply
> insurance costs come closer to the expected costs of treatment.
In general, insurance costs are above the expected cost of treatment (this is essential, or insurance would be unprofitable). As such, insurance costs coming closer to the expected cost of treatment is a good thing.
If I know for sure that I will need treatment (assuming my insurer has the same information), I shouldn't seek to buy insurance.
Insurance is designed as a cover for risk - the only reason I can buy insurance at a rate cheaper than the treatment itself because of the possibility that I won't need the treatment, and the insurance company will keep the money.
[+] [-] kvinnako|12 years ago|reply
[+] [-] jonknee|12 years ago|reply
The worst case scenario they used was if someone at risk for breast cancer got mammograms early. The horror, but also the cost savings from early detection! If you claim your grandmother had breast cancer you will no hassle getting a mammogram at an early age, there should be no difference if you have genetic hints at the same risk-factor. No insurer would pay for a preventative mastectomy without strong medical evidence (e.g. not just a genetic test), there's no sense in bringing up a world-famous rich actress who almost assuredly paid for her surgery out of pocket.
The most expensive thing for a health insurer is the customer who doesn't get a mammogram when she should.
[+] [-] yummyfajitas|12 years ago|reply
Luckily Congress is looking out for women and passed a law requiring medically useless tests.
http://www.bloomberg.com/news/2012-07-31/in-mammogram-debate...
http://www.uspreventiveservicestaskforce.org/uspstf/uspsbrca...
[+] [-] dsr_|12 years ago|reply
If you can't deny coverage for a pre-existing condition, or raise premiums when someone develops a new disease, you shift to reducing your cost by doing what's most effective. That's the best part of the ACA.
[+] [-] jdale27|12 years ago|reply
[+] [-] nodata|12 years ago|reply
[+] [-] yummyfajitas|12 years ago|reply
Consider a world without GINA/other regulations and with simple actuarial pricing of insurance. Say you have a 1 in 100,000 risk of a disease costing $10k before a genetic test. After the genetic test, you risk is either 1 in 1,000,000 (if negative) or 1 in 10,000 (if positive). The insurance company would charge you $1.10 for a policy if untested, $11 for a policy if tested positive, and $0.11 for a policy if tested negative. These policies result in a 10% profit per person (ignoring admin costs, etc). If you lie about getting tested, that's grounds to revoke your policy.
As a result of GINA, people can get tested but the insurance company can't price insurance accordingly. As a result, the people with a negative test will drop coverage while people with a positive result will buy it, and prices will have to go up. If everyone behaved this way, then P(disease|buys insurance) = 1/10,000 in spite of the fact that P(disease)=1/100,000. Prices will rise to $11.
Price increases will reduce the quantity purchased (resulting in lower profits) and result in political/regulatory pushback.
[+] [-] ghshephard|12 years ago|reply
Many people (most?) would not have purchased health insurance when they were young and healthy, and they certainly would never purchase long-term care insurance.
Those people who get Health Insurance typically either get it as part of a Group Insurance Plan from a company (in which case, they insurance company gets a nicely mixed up group of healthy and unhealthy people).
With systems like 23andMe - otherwise healthy people now start loading up on various kinds of insurance, with a greater chance that the Insurance Company will have to pay out on the policy. It's somewhat like someone having advance notice of an arsonist in the neighborhood loading up on fire insurance. No guarantee that you will use it - but a much better chance than average.
[+] [-] fsckin|12 years ago|reply
>23andMe’s tests, designed to tell people if they're at risk for certain health conditions, could lead to an increase in care--necessary or not--which insurers could end up covering
[+] [-] sentenza|12 years ago|reply
Whoever reads this, be careful before having your DNA tested. In some countries (as, for instance my native Germany) you have the legal obligation (!) of sharing any relevant results with insurers before buying insurance.
[+] [-] lennel|12 years ago|reply
[+] [-] antirez|12 years ago|reply
[+] [-] Houshalter|12 years ago|reply
Wth? Do people not understand the point of insurance?
This also stifles innovation since they would otherwise have an incentive to invest in this technology. And more importantly it would save people's lives if the insurance made them take tests and caught this stuff early.
[+] [-] md2be|12 years ago|reply
[+] [-] michaelochurch|12 years ago|reply
If we still have private health insurance in 2050 then we have failed, and society will probably be like in that rock opera, "Repo! The genetic opera."
Also, we all know that they'll be the first ones to use genetic data against people.
[+] [-] omonra|12 years ago|reply
[+] [-] damncabbage|12 years ago|reply