To Test or Not To Test? That is the Genetic Question

A higher risk of disease may result in higher insurance rates

Prof. Mike Hoy

Prof. Mike Hoy

Angelina Jolie made headlines when she had genetic testing and determined that, like her mother and aunt, she carried a gene that significantly increased her risk of developing breast cancer. Her experience – and her use of that information to make decisions about having preventive surgery – probably motivated others to seek genetic testing as well.

As genetic testing becomes more common, though, there are other aspects to be considered, such as the issues economics professor Michael Hoy explores in his research. What if your insurance company is given information about your test results and uses that to either deny you coverage or increase your rates well beyond the usual costs? It seems like an extra punishment on top of the bad news you’ve received. Hoy calls that discrimination.

On the other hand, what if you know your genetic test results but your insurance company doesn’t – and you don’t have to tell them. If you know you’re likely going to die within the next few years, you might decide to invest in buying a lot of life insurance – a lot more than you would otherwise. Hoy calls that being opportunistic. If too many people capitalize on their test results in this way, insurance rates will rise for everyone.

Canada’s privacy commissioner, recognizing the issues on both sides, asked Hoy and co-author Maureen Durnin to conduct an analysis on this topic. Their paper pointed out:

“The quantity of relevant genetic information that is held by the insurance buying public is the most crucial feature…for the most part, little impact is likely to occur from a ban on insurers using genetic test results for health and life insurance markets.”

But they go on to add: “There are some potential developments that could shift the debate. The potential for substantially more private information to be held by insurance buyers may increase and adverse selection may end up making a ban harmful to the efficient functioning of insurance markets. Thus, if a ban were created, there should be periodic reviews of how the insurance market is performing.”

In other words, at present the number of people who have genetic testing done and who know they have negative results is very small, so the effects on insurance are minimal. However, more readily-available information might shift that and cause a problem for insurance companies.

Hoy suggests that one way to prevent people who know they are likely to die soon from buying large amounts of insurance is to limit the amount that can be purchased. This has been done in a number of other countries.

“It’s hard to know what the limit should be,” says Hoy. “I’d suggest maybe $250,000 to $500,000 but perhaps it should be geared to income.” He notes that a Canadian senator has recently proposed a bill to restrict insurance companies from requiring information from genetic testing and has set the limit at $1-million worth of insurance.

These issues are complicated, Hoy adds, because people don’t always behave logically. Despite the fact that genetic testing seems to offer useful information, many will decide not to have these tests done, even with a family history of illness. “If you have a parent with Huntington’s disease, for example,” he explains, “you have a 50-per-cent chance of developing the disease yourself. But when people at risk are offered testing, only 10 to 20 per cent agree. You would think they would want to know, because they could make financial decisions based on that information. But they don’t.”

Even if knowing the genetic risk would give someone an opportunity to prevent the disease, the rates for testing are still only about 30 per cent for those deemed to be eligible.

Another project Hoy is continuing to work on is exploring different ways to look at poverty. He explains, “Up until a few years ago, people talked about poverty based on a snapshot – the number of people who were poor at a given point in time. That doesn’t really tell us the whole story. I’ve been working (with Buhong Zheng and Brennan Thompson) on finding ways to capture lifetime or chronic poverty.”

As Hoy points out, both the intensity and duration of poverty matter. “If you look year by year at U.S. data, more non-white minorities are affected by poverty than the majority white population,” he says. “But if you look at chronic poverty, the difference is much greater. The non-white population has more periods of poverty in their lifetimes and more consecutive periods of poverty.”

Hoy also emphasizes the effects of poverty during early childhood. “There is evidence that child poverty affects children throughout their lives in terms of cognitive development and health,” he says.

His approach, he hopes, will inform policy-makers. “By focusing more on people who are poor for many periods of their lifetime, we can increase human capital and find better strategies to help them out of these poverty traps.”