Ezra Klein: How a $1,000 test could destroy the health-insurance industry

[babylonsister]

http://www.washingtonpost.com/blogs/ezra-klein/post/how-a-1000-test-could-destroy-the-health-insurance-industry/2012/03/08/gIQA33KVzR_blog.html

How a $1,000 test could destroy the health-insurance industry
Posted by Ezra Klein at 02:07 PM ET, 03/08/2012

snip//

At the moment, our understanding of the genome remains relatively crude, and our ability to predict future health risks based off of genomic sequencing is limited. But we’re getting better at it. For instance, women in families with a high rate of breast and ovarian cancer can have themselves tested for alterations in the BCRA1 and BCRA2 genes. If they test positive, it means their risk of developing breast or ovarian cancer is significantly higher.

As we sequence more genomes, mine more data, and conduct more studies, we’ll find a lot more of these connections. Eventually, genomic testing will be a powerful predictor of future illness. And it raises the potential that young people will get themselves tested and then purchase insurance based off the result. So those with a clean genomic result might go for a cheap catastrophic plan, while those with a high risk of developing pricey illnesses will opt for more comprehensive insurance.

The result would be, in insurance terms, an “adverse-selection death spiral,” as the healthy opt out of expensive insurance, the sick opt into it, and premiums spin out of control.

“For all of human history, humans have not had the readout of the software that makes them alive,” Larry Smarr, a member of the Complete Genomics scientific advisory board, told The New York Times. “Once you make the transition from a data poor to data rich environment, everything changes.”

The policy that solves this problem is an individual mandate, or Medicare-for-All, or some other approach that forces the healthy to insure themselves alongside the sick. In its absence, there’s no way to make a risk-selection model work for the health insurance industry, as consumers will be armed with detailed information about their health risks that insurers are legally prohibited from pricing into their insurance premiums.

[ret5hd]

1. What is the gene responsible for breaking your back?

[zipplewrath]

3. Which is why

That is why people will still buy insurance. But the insurance company will chage people alot less because out of 100,000 people, only 200 or so will break their backs. But in the other categories, out of 100,000 people, 80,000 will develope certain diseases if they have certain genetic markers. Guess which ones will be paying much higher premiums?

[Lionessa]

2. I think Ezra is confused.

The mandate does not solve this since it doesn't mandate the type of insurance, comprehensive or catastrophic, that a person gets, just that they get something. Only a fully public option like Medicare for all will really work.

[Ziggystrange]

5. Klein not confused

"The policy that solves this problem is an individual mandate, or Medicare-for-All, or some other approach that forces the healthy to insure themselves alongside the sick. In its absence, there’s no way to make a risk-selection model work for the health insurance industry, as consumers will be armed with detailed information about their health risks that insurers are legally prohibited from pricing into their insurance premiums. "


He covered that in this paragraph. I understand he did not specifically state it but of all the talking heads Klein is one of the most coherent.

IMHO

[gkhouston]

6. Nor does it "mandate" that insurance be affordable.

"Available" insurance that's far beyond of the means of most consumers is insurance in name only.

[mike_c]

4. I love seeing the phrases "death spiral" and "health insurance industry..."

...in the same sentence!