Insurance Risk Classification in an Era of Genomics: Is a Rational Discrimination Policy Rational?
66 Pages Posted: 6 Nov 2017 Last revised: 7 May 2018
Date Written: November 2, 2017
There is continuing societal debate about whether insurers should be able to collect, access, or use genetic test results when considering applications or setting premium and coverage levels. This debate centers around deeply rooted beliefs over the privacy and personal nature of genetic information on the one hand and the financial necessities and economic considerations of the insurance industry on the other. Insurers argue access to applicants’ genetic test results is essential for the industry’s financial security. However, public distrust of insurance companies, coupled with anecdotal evidence of individuals unable to secure insurance, led to calls for barring insurers from considering genetic test results and, in the context of health insurance, the realization of this goal. It remains an open question whether and how the use of genetic test results by life, long-term-care, and disability insurers should be circumscribed. This paper examines the so-called ‘rational discrimination’ approach to addressing insurer use of genetic tests. Under a rational discrimination approach, insurers are allowed to use a subset of genetic tests that meet established standards of scientific, clinical, and actuarial significance. The paper reviews international implementation of rational discrimination approaches, current trends in risk classification, and standards for determining scientific, clinical, and actuarial relevance. The paper argues that a rational discrimination approach has the potential to level the playing field across insurance companies nationally, enhance the economic efficiency of the insurance system, increase public understanding and trust in insurance risk classification, and dampen fears of genetic discrimination.
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