As the field of genetics continues to advance, policymakers will face a host of clinical, social, moral, and financial issues. Earlier this year, Congress weighed in with proposed legislation in the Senate and the House prohibiting discrimination on the basis of genetic information with respect to health insurance and employment. In February 2005, the Senate voted unanimously in favor of bill S. 306, the Genetic Nondiscrimination in Heath Insurance Act of 2005. [1] In March, a bipartisan group of co-sponsors introduced an identical bill in the House, H.R. 1227.[2]
While a number of states have passed laws prohibiting discrimination based on genetic information, federal policymakers want to ensure more comprehensive protections. A notable feature of the proposed federal legislation prohibits insurers from using, requesting, or disclosing genetic information for purposes of underwriting, determining enrollment eligibility, rating premiums, or creating, renewing, or replacing a plan, contract, or coverage for health insurance or health benefits. The restrictions extend to employer-sponsored, individual, and Medicare supplemental markets.
Health insurance underwriting is the process through which individuals’ medical history and other factors are evaluated for purposes of coverage determination. While current privacy rules permit the use of health information for “health care operations,” including underwriting, the proposed federal legislation specifically prohibits the use of genetic information for this purpose.
At issue in the proposed legislation is genetic information that is currently known by individuals or information that will become known to an individual who undergoes genetic testing. Supporters of the proposed legislation argue that individuals should not face genetic discrimination regarding health insurance or employment. Insurers argue that having access to genetic information is important for managing risk and setting premium rates and accordingly, should be available for underwriting purposes. They state that failure to disclose this type of information could lead to adverse selection and higher insurance costs for everyone.[3]
While there have been significant changes in health care technologies and attendant costs in the past 10 years, it is interesting to note that work in the early 1990s by HCFO grantee William R. Braithwaite, M.D., Ph.D., at the University of Colorado demonstrated that medical screening as part of insurance underwriting could be eliminated in the small-group market without an increase in premiums. Braithwaite cautioned that his analysis did not eliminate the potential for adverse selection.
It is clear that advances in research and applications are likely to change the way genetic testing is used in health care. Genetic testing will undoubtedly have broad effects on health care financing in the insurance context and elsewhere. The challenge for policymakers will be to accommodate changes in knowledge, while at the same time balancing the competing interests of stakeholders.
Currently, genetic testing is most often used to confirm diagnoses or to predict who is most at risk for a particular disease or condition. Advance knowledge of risk factors could point to preventive services or the need for early detection, and could allow providers to more cost-effectively target services. Additionally, new applications for genetic testing are currently being developed, one of which is pharmacogenomics (PGx), which studies all of the many genes that determine drug effects. HCFO grantee Louis F. Rossiter, Ph.D., at the College of William and Mary is examining the emerging market for PGx, and his preliminary analysis suggests that PGx could be cost-effective in the long term.
Rossiter’s work may inform what is likely to be a debate in the not too distant future—whether the direct costs of genetic testing will be covered by insurers. The issue then becomes whether it is feasible for insurers to use genetic information for coverage decisions but not for underwriting decisions. As the technology matures, this issue will certainly challenge stakeholders.
HCFO-funded research:
Title: The Emerging Market for Pharmacogenomics and Health Care Competition
Institution: College of William and Mary
Time: February 2004 – April 2005
Principal Investigator: Louis F. Rossiter, Ph.D.
How does pharmacogenomics (PGx) fit or fail to fit within the current systems of financing and organization of health care? The researcher plans to: 1) gather information and summarize the PGx products and services available now or in the near term; 2) conduct open-ended interviews of key informants regarding the way suppliers are bringing these products to market; and 3) study the implications for financing and the organization of the delivery system, including reimbursement rules, for at least three current health care products and services that are being affected or replaced by PGx in the near future. The objective of this study is to suggest ways in which current payment methods could be changed to accommodate PGx and how a larger study could use patient-level claims data to design changes or a new system to recognize PGx.
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Title: An Analysis of the Effects of Medical Underwriting
Institution: University of Colorado, Health Sciences Center
Time: September 1991 – February 1994
Principal Investigator: William R. Braithwaite, M.D., Ph.D.
Does medical underwriting really have a positive financial impact on insurers? This study compared claims allowed for two different pools of small firms covered by the same insurance company—one guaranteed issue and one fully medically underwritten—to determine if medical underwriting reduces the financial cost to an insurer of covering a particular group. This research was intended to provide policymakers with an indication of the potential impacts of proposed efforts to limit medical underwriting through regulation.
Glazner, J., W.R. Braithwaite, S. Hull, and D.C. Lezotte. “The questionable value of medical screening in the small-group health insurance market,” Health Affairs 1995 Summer, Vol. 14, No. 2, pp. 224–34. http://content.healthaffairs.org/cgi/reprint/14/2/224
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[3] Statement of Thomas F. Wildsmith, American Academy of Actuaries. Hearing on Genetic Nondiscrimination: Examining the Implications for Workers and Employers, Committee on Education and the Workforce, Subcommittee on Employer-Employee Relations, U.S. House of Representatives, July 22, 2004. http://www.actuary.org/pdf/health/genetic_22july04.pdf
