10/23/10 5:51 PMBring Your Genes to Your Life Insurance Sales Representative - Grasping Reality with Both Hands

Page 1 of 8http://delong.typepad.com/sdj/2010/08/bring-your-genes-to-your-life-insurance-sales-representative.html

Grasping Reality with Both HandsThe Semi-Daily Journal of Economist J. Bradford DeLong: Fair, Balanced, Reality-Based, and Even-HandedDepartment of Economics, U.C. Berkeley #3880, Berkeley, CA 94720-3880; 925 7080467; delong@econ.berkeley.edu.

Economics 210aWeblog ArchivesDeLong Hot on GoogleDeLong Hot on Google BlogsearchAugust 29, 2010

Bring Your Genes to Your Life Insurance Sales Representative

Bring Your Genes to Your Life Insurance Sales Representative « The Berkeley Blog: Putme down as one of those who was puzzled when Dean Mark Schissel said on “AllThings Considered,” of the three genes to be tested in “bring your genes to Cal”:

[W]e purposefully chose three genes that are not disease associated…

People who are lactose-intolerant are more likely to develop hip fractures late in life–especially if they do not regularly take their calcium supplements. People with a lowability to metabolize alcohol are unlikely to become alcoholics–but if they do, they (atleast as I read the literature) may be at greater risk of developing cirrhosis of the liver.Pregnant women who metabolize folic acid poorly are more likely to have babies withneural tube defects like spina bifida. People with poor folic acid metabolism may be atgreater risk of heart attack, stroke, and cancer. [UPDATE: This was wrong. See

correction]

Now lactose-intolerance, slow alcohol metabolism, poor folic acid metabolism are notassociated with any diseases that Berkeley freshmen have now: they are all healthy ashorses–an amazingly fit and clean-living group. In that Dean Schissel is correct: afreshman who hits “bingo” and is lactose intolerant, cannot metabolize alcohol easily,and metabolizes folic acid poorly does not have any diseases. Today. But these geneticmarkers are associated with a greater likelihood to develop diseases later on. And thathas implications.

The first and most important impication is that, from a public health perspective, wewould very much want freshmen to bring their genes to call and find out what the testssay. Those who are or will become lactose intolerant should get in the habit of takingtheir calcium supplements, and taking them regularly, now. Those with low alcoholmetabolism… well, there are some fraternities that I think they should definitely not

Dashboard Blog Stats Edit Post

10/23/10 5:51 PMBring Your Genes to Your Life Insurance Sales Representative - Grasping Reality with Both Hands

Page 2 of 8http://delong.typepad.com/sdj/2010/08/bring-your-genes-to-your-life-insurance-sales-representative.html

join, because the long-term health dangers of high alcohol consumption may be grave.Those with poor folic acid metabolism should get in the habit of taking folic acidsupplements, and get in the habit now–especially women who are thinking ofbecoming pregnant. Figuring out what your genetic endowment is, determining whatrisks and obstacles it puts in the way of your leading a long and happy life, and takingaction to mitigate those risks and avoid those obstacles is a very smart thing to do.

But there is a second implication–a consequence of our highly messed-up health andinsurance system.

If you ask a normal American whether those unlucky enough to get deathly ill shouldhave to pay the full cost of their extraordinary medical treatment, he or she will sayno–that that is what health insurance is for. Most of us will be lucky. Some of us willbe unlucky. We should all buy insurance. That way, being unlucky in your health willnot leave you broke and impoverished as well as unhealthy. That is fair.

But suppose that the “luck” is something that is inextricably a part of you–suppose thatthe luck is, literally, in your genes and thus part of what makes you you? Are you stillunlucky if you have a hip fracture at 70 because you have been lactose-intolerant allyour life because that was in the genes that your parents gave you? Or should theinsurance company be allowed to say that that is not bad luck, that is who you are–andcharge you a higher price for your life and Medigap insurance than it charges others?

I would say no: people who are unlucky in their genes are unlucky just as people whoare unlucky in having a tree branch fall and break their leg are unlucky. In both caseswe want the community to cover the cost of their treatment: it’s bad enough that theyare in bad health, we don’t need to make them poor also. There are others who wouldsay yes: that once you know that you have a good chance of developing some conditionor disease it is no longer insurance, and that others who don’t run the same chance asyou shouldn’t pay for treating you for something that they never had any chance ofgetting.

In the United States of today, the logic of the life insurance industry and of riskunderwriting is pushing us toward the second answer. If some life insurancecompanies use genetic information–like that being tested for in “bring your genes toCal”–to deny policies and raise rates while others do not, those life insurancecompanies that do not will find themselves losing money and markets and disappear.And it is conceivable in some possible futures that some insurance adjuster somewherewill deny payment because “your mother knew that she was at higher risk for a hipfracture because of her lactose intolerance, and did not disclose that to us.”

In the United States of today, however, the logic of the social insurance state–mostrecently the PPACA Obama health care reform bill–is to deny private insurancecompanies and the government of the option to treat some people differently thanothers, to charge some more or deny some policy coverage completely because of whatis in their genes. The PPACA requires community rating: that insurers ignore what theyknow about how much your medical care is likely to cost because you are lactoseintolerant or predisposed to hypertention or whatever.

Thus I would like to see “bring your genes to Cal” proceed along two tracks:

First, what our genetic endowment tell us about how we should, as a group and also asindividuals each with our own unique genetic makeup, change our behavior to leadlonger, richer, and healthier lives.

Second, what the increase in knowledge about our individual selves and our individual

10/23/10 5:51 PMBring Your Genes to Your Life Insurance Sales Representative - Grasping Reality with Both Hands

Page 3 of 8http://delong.typepad.com/sdj/2010/08/bring-your-genes-to-your-life-insurance-sales-representative.html

risks does to undermine the more general principles of social insurance–that one of thethings societies do is to spread risks around, so that the unhealthy are covered byinsurance and treated by doctors and so are just unhealthy, and that their ill-luck isnot amplified by a system that requires that they impoverish themselves in order to gettreatment or even that denies them treatment so that they die instead.

The best place to be, it seems to me, is with single-payer publicly-funded nationalhealth insurance and as much individual fine-grained information about geneticmakeup and risk as we can get.

But the United States is not there. And it does not look like the United States is goingthere anytime soon. And as long as we are not there–as long as your life insurancecompany would dearly like to know how likely it is that you will fracture a hip at 70because it might cost them money–there was going to be a tension to manage betweensocial insurance risk-spreading on the one hand and knowledge of our genes and theireffect on our destinies on the other.

So we had better get started on managing this tension.

Brad DeLong on August 29, 2010 at 09:51 PM in Economics, Economics: Health,Obama Administration, Politics, Science, Science: Biology | Permalink

Reblog (0) |

Favorite

| Digg This | Save todel.icio.us | Tweet This!

TrackBack

TrackBack URL for this entry:http://www.typepad.com/services/trackback/6a00e551f0800388340134868c9a8c970cListed below are links to weblogs that reference Bring Your Genes to Your Life Insurance SalesRepresentative:

Comments

Jason Dick said...Honestly, if we were talking about total lifetime care, I'd be a bit surprised if theseconsiderations made much difference at all. First, once somebody contracts a major,life-threatening illness, they usually, well, die. And so the medical bills stop. Everyonce in a great while you end up with a person who gets one nasty illness afteranother, and manages to survive them all. But these are the exception, not the rule.

I don't have any numbers on hand of total lifetime costs, but unless you're killed rathersuddenly, I strongly suspect that over a total lifetime of care, we tend to have moresimilar medical costs than you might expect.

That said, private insurance doesn't much care about total lifetime costs. They careabout how much they have to pay while you're under their coverage, which will be, atlatest, until you're 65. This distorts things significantly, because even though the totallifetime cost may be similar, a person who starts contracting a nasty, expensive illnessbefore the age of 65 is going to hit private insurance's pocket book, while one who

10/23/10 5:51 PMBring Your Genes to Your Life Insurance Sales Representative - Grasping Reality with Both Hands

Page 4 of 8http://delong.typepad.com/sdj/2010/08/bring-your-genes-to-your-life-insurance-sales-representative.html

doesn't won't. And that disparity sets us up for some nasty behavior on the part ofprivate insurance.

I really wish we had single-payer health care.

Reply August 30, 2010 at 02:59 AMsave_the_rustbelt said...All of this pales before the fact that 1 of 3 Americans are likely to become obese, withmany seriously obese, for some extended period of their lifetime.

We will be defeated not by tyranny, but by Krispy Kreme.

Reply August 30, 2010 at 05:56 AMNeal said...Bravo!!

Reply August 30, 2010 at 07:51 AMCarl Shulman said...Brad,

Surely you should mention that the 2008 Genetic Information Nondiscrimination Actis already law, and prohibits insurers from charging higher prices or denying coveragebased on genetic predispositions to disease?

http://en.wikipedia.org/wiki/Genetic_Information_Nondiscrimination_Act

Reply August 30, 2010 at 08:04 AMBrad DeLong said in reply to Carl Shulman...That applies to health insurers only.

Does it apply to life insurance? No. Does it apply to long-term care insurance? Im notsure.

Is it enforceable? I doubt it: there are so many other reasons to deny life insurancecoverage that could serve as excuses...

Yours,

Brad DeLong

Reply August 30, 2010 at 08:46 AMPlatypus said...As a geneticist I feel I should add a two points about 2008 Genetic InformationNondiscrimination Act (GINA), as it offers less protection that you might think againstgenetic discrimination.

GINA applies specifically to discrimination in group health insurance and employment.Insurance companies are free to use genetic information in pricing individual healthinsurance policies as well as life insurance and disability insurance.

In addition, GINA was designed to address the issue of genetic predisposition - "badgenes" that haven't yet affected your health. Under GINA insurers are free todiscriminate once there is a clinical manifestation of your genetic burden - e.g., GINAwould ban an insurer from using the results of a molecular test demonstrating that youhad a mutation that predisposed you to high cholesterol but would allow the insurer touse the results of your high serum cholesterol to set your rates or deny you coverage.Cancer predisposition would work the same under GINA. Discrimination against

10/23/10 5:51 PMBring Your Genes to Your Life Insurance Sales Representative - Grasping Reality with Both Hands

Page 5 of 8http://delong.typepad.com/sdj/2010/08/bring-your-genes-to-your-life-insurance-sales-representative.html

people with a high genetic risk of cancer - prohibited; discrimination against peoplewho had developed cancer because of their high genetic risk - allowed.

Reply August 30, 2010 at 08:49 AMMaynard Handley said in reply to Jason Dick..."First, once somebody contracts a major, life-threatening illness, they usually, well,die. And so the medical bills stop. Every once in a great while you end up with a personwho gets one nasty illness after another, and manages to survive them all. But theseare the exception, not the rule."

Do you have any evidence for these claims?I mean, isn't this a large part of the problem with our healhcare debate --- a surfeit ofsupposedly "obvious" claims about healthcare, the motivations of doctors, the effects oflawsuits, etc etc; most of which, when examined closely, appear to be BS.

I agree with your larger point ("private insurance doesn't much care about totallifetime costs"), I just wish that your statements along the way were either not said, orsaid with some evidence.

Reply August 30, 2010 at 09:52 AMKali said in reply to Jason Dick...Sadly, no, there are a great many of us who have chronic illnesses that cost us a hugeamount of money but don't tend to kill us in a hurry.

Some of the more common ones are lupus, cancer, and multiple sclerosis, but there area great many long-term health conditions that cost ridiculous amount of money for along time.

I happen to have one of the comparatively rare expensive conditions - Ehlers-DanlosSyndrome, which is a genetic collagen disorder. The direct effect of it is to give mefragile tissues, which leads to injuries like cuts and bruises and joint injuries likesubluxations, dislocations, and hyperextention (all of my joints are affected). I alsohave secondary conditions because of it: Raynaud's syndrome, Postural OrthostaticTachycardia Syndrome (POTS), fibromyalgia, Gastro-Esophegal Reflux Disease(GERD), Irritable Bowel Syndrome (IBS), Alpha-Delta sleep disorder (which is actuallysecondary to the fibromyalgia, we think), snapping hip syndrome, snapping shouldersyndrome. I also have unrelated conditons: asthma, migraines, allergies, extremelysensitive skin.

I'm a very, very expensive person, both short term and long term. And I'm only 26 - I'llgo on being a very expensive person for the next 40-70 years (depending on which sideof the family I take after in lifespan). We're not that rare, unfortunately for us.

And oh man do I ever agree with you on single-payer health care! The people I know inthe UK with the same condition who sometimes complain because I can get certaintypes of healthcare quicker, but they've never been denied for the medication orequipment they need simply because their insurance decides it's too expensive.

~Kaliwww.brilliantmindbrokenbody.wordpress.com

Reply August 30, 2010 at 02:50 PMKali said...Brad, I think it is worth noting that of the people who file for bankruptcy because ofhealth care bills, some 75% had insurance at the start of the illness that led them todeclaring bankruptcy. Keeping people insured is only a very, very limited solution; thebigger problem is that insurance rarely covers what people expect it to. In the case of

10/23/10 5:51 PMBring Your Genes to Your Life Insurance Sales Representative - Grasping Reality with Both Hands

Page 6 of 8http://delong.typepad.com/sdj/2010/08/bring-your-genes-to-your-life-insurance-sales-representative.html

Me: Economists:

PaulKrugmanMark ThomaCowen andTabarrokChinn andHamiltonBrad Setser

Juicebox

Mafia:

Ezra KleinMatthewYglesiasSpencerAckermanDanaGoldsteinDanFroomkin

Moral

Philosophers:

Hilzoy andFriendsCrookedTimber ofHumanityMarkKleiman andFriendsEricRauchwayand FriendsJohn Holboand Friends

catastrophic illness, the plans most people have include relatively low caps for single-event or annual or lifetime benefits. (That's from a Harvard Study that looked at 2001data; it was particularly frightening when you consider that over half of all people whofile for bankruptcy are there because of illness, so somewhere between 37% and 40% ofpeople who file for bankruptcy are filing because of an illness that they weresupposedly insured for.)

~Kaliwww.brilliantmindbrokenbody.wordpress.com

Reply August 30, 2010 at 02:57 PMComments on this post are closed.

First, Kill all the PensionsThe Atlantic (blog) - Oct 19, 2010She may or may not have been the first major economics blogger, depending onwhether we are allowed to throw outlying variables such as Brad Delong out of ...Related Articles » « Previous Next »

economics DeLong

10/23/10 5:51 PMBring Your Genes to Your Life Insurance Sales Representative - Grasping Reality with Both Hands

Page 7 of 8http://delong.typepad.com/sdj/2010/08/bring-your-genes-to-your-life-insurance-sales-representative.html

10/23/10 5:51 PMBring Your Genes to Your Life Insurance Sales Representative - Grasping Reality with Both Hands

Page 8 of 8http://delong.typepad.com/sdj/2010/08/bring-your-genes-to-your-life-insurance-sales-representative.html