Re:Why 23andMe Terrifies Health Insurance Companies
by netcan on Wednesday November 27, 2013 @06:47AM
(#6807582)
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.
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