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Mapping Public Policy for Genetic TechnologiesChapter 7. Insurance
IntroductionEach person has his or her own unique combination of 23 pairs of genes or chromosomes, the basic units of human heredity. These genes form the human genome. The human genome is the genetic blueprint of the human body. The code is made up of about 3 billion chemical "letters" or nucleotides, the chemical units that create each person's chromosomes. The genetic code is formed by combinations of only four amino acids-cytosine, tyrosine, guanine and adenine, in various combinations. These nucleotides are arranged in pairs, forming a twisting, ladder-like structure, known as a double helix, called deoxyribonucleic acid (DNA). If stretched out, each cell's genetic code would be about three feet in length. Each cell of the human body contains the entire genetic code for an individual, consisting of about 100,000 genes. Genes order the production of proteins and other chemicals that make up the human body. When a gene is altered or mutated, the wrong message is sent to the production mechanism of the cell that can, in turn, cause the body to malfunction, creating genetic disease. Genetic disease may be either inherited or acquired. Inherited disease arises from the chromosomes received directly from parents, as in cystic fibrosis. This chapter originally was written as a 1996 report of the National Association of Insurance Commissioners' Genetic Testing Working Group-1996. It is reprinted with permission. These diseases may be from dominant genes, requiring only a single gene from one parent, or they may be from recessive genes, requiring a gene from each parent. Genetic disease also may arise from alteration of the genetic code after birth--an acquired disorder. Certain forms of cancer are most likely to be this type of disease, since the gene that controls the growth of a specific cell appears to be damaged so that the normal cell loses control, expanding locally and spreading distantly, ultimately killing the patient. Alterations to genes also may increase the likelihood of someone developing a disease, although the disease itself is not genetic in origin. Definition of Genetic TestingNo generally accepted term precisely defines "genetic testing." The term implies that a piece of the human genetic code is examined to determine if the chemical sequence is proper. However, this is not currently possible except in the most sophisticated laboratories. Rather, the underlying genetic code must be deciphered through indirect evidence. In those states where legislation has been adopted to address genetic testing, the definition has been relatively restrictive, limiting the definition to those tests that examine the genetic code or direct gene products. In defining genetic testing, insurers have advocated extremely tight restrictions, limiting such testing to laboratory testing of human DNA or chromosomes. Alternatively, some advocacy groups have proposed much broader definitions, including a prohibition against inquiring into the applicant's family history or even the ages or health of one's parents as a form of genetic test. The Task Force on Genetic Testing of the Working Group on the Ethical, Legal and Social Implications of the Human Genome Project defines genetic tests as: The analysis of human DNA, chromosomes, proteins or other gene products to determine the presence of disease-related genotypes, mutations, phenotypes or karyotypes for clinical purposes. Such purposes include prediction of disease risks, identification of carriers, monitoring, diagnosis or prognosis, but do not include tests conducted purely for research. The working group suggests the working definition be of genetic screening or testing be: A laboratory test of a person's genes or chromosomes for abnormalities, defects or deficiencies, including carrier status, that are linked to physical or mental disorders or impairments, or that indicates a susceptibility to illness, disease or other disorders, whether physical or mental, which test is a direct test for abnormalities, defects or deficiencies, and not an indirect manifestation of genetic disorders. Current State of Genetic TestingPerhaps the current most famous genetic project is the Human Genome Project, a worldwide project initiated approximately five years ago in an attempt to analyze the human genetic code. It is anticipated that the project will take about 15 years to complete and will cost about $3 billion. Presently, scientists estimate that they have identified genes responsible for about one-half of the 6,500 known inherited diseases caused by a single defective gene, including the genes responsible for cystic fibrosis and neurofibromatosis. In addition, certain genetic abnormalities have been discovered that predispose individuals to certain diseases- such as breast cancer in women who inherit the BRCA-1 abnormality-or that indicate a high probability of cancer in families who have a history of hereditary non polyposis colon cancer. The project hopes to accomplish two goals. The first is to map the genome to determine the location of each of the thousands of genes. The second is to sequence the genome to determine the order of each of the chemical letters that make up the genetic code. By achieving this, scientists hope to be able to examine an individual's genetic code to identify any abnormality that might exist in the sequence of the code and then determine how that abnormality might affect the individual by ascertaining which structure or function might be changed by the location of the abnormality on the map of the genome. To date, less than 1percent of the genome's 3 billion units has been sequenced or deciphered. Most current genetic tests examine either gene products or macroscopic structures resulting from the action of a specific gene. Many genetic syndromes are diagnosed solely through physical examination of the patient. Other genetic tests examine the chemicals created by the body from the genetic code, for example testing newborns for treatable metabolic diseases such as phenylketonuria (PKU). Many states mandate such neonatal testing. Still other diseases are diagnosed by a combination of these two methods. Chromosomes themselves may be examined microscopically to determine if is there is a cellular chromosomal abnormality, as when an amniocentesis is performed on a pregnant woman to test for Down Syndrome connected with trisomy. Genetic testing is of variable utility. This is particularly evident in autosomal regressive conditions, where the genetic abnormality must be inherited from both parents. For example, with cystic fibrosis two individuals who carry the single abnormal gene will not develop the disease. However, should those individuals have children together, those children carry a 25 percent risk of inheriting both abnormal genes and then will certainly develop the disease. Therefore, carrier status is not predictive of future disability for those individuals. In autosomal dominant conditions such as Huntington's Chorea, the presence of a single gene means those individuals will develop the disease if they live long enough. These individuals are essentially presymptomatic in the disease process, since the only condition under which the disease will not develop is an early death. The identification of the gene is therefore highly predictive of future disability. Intermediate between these two conditions are the complex gene-influenced conditions that have a predisposition to the development of a disease. For example, a woman who inherits the BRCA-1 abnormality has a high probability of developing breast cancer. However, about 15 percent will not develop the disease. Therefore, the predictive value of the genetic abnormality is of significance, but places the individual in an intermediate risk exposure, between the recessive and dominant genetic disorders. The working group sought responses to several questions regarding the status of genetic testing. The first was whether insurers currently were requiring applicants to submit to genetic testing. The group found that insurers are not requiring genetic testing as a prerequisite to coverage. The second question was whether insurers were using genetic test results from any source in underwriting. It was found that, although no insurers now are requiring genetic testing, if the results of genetic testing are in an applicant's medical record and are relevant, insurers are likely to include such results in the underwriting process. Genetic Testing IssuesLife and Disability Income InsuranceLife and disability income insurance policies provide financial security to the policyholder's beneficiaries and for the benefit of the insured. By contrast, health insurance contracts provide indemnification for the cost of medical services rendered to the insured. Life and disability income insurance may be underwritten either individually or on a group basis. Both the underwriting and pricing of these policies are performed at the inception of these contracts. Usually, once issued, neither the terms of nor the premiums for these individual policies can be changed regardless of changes in the nature of the insured risk or the length of time the contract is in effect. These policies also cannot generally be terminated except for nonpayment of premium. Most life insurance policies are individual in nature. By contrast, most health insurance is provided by employer group contracts and, hence are repriced annually and can be canceled under certain circumstances. Some group life and disability income policies have provisions allowing the modification of premiums for groups as a whole. However, an individual may not be singled out for premium increases based on health factors. Also, although policies cannot be terminated except for nonpayment of premiums, some policies do expire after a stated period. At the end of 1993, the most recent year for which there are published statistics, life insurance in force in the United States amounted to $11,105 billion. Seventy-eight percent of all American households and 154 million Americans owned life insurance at that time. Life insurance purchases during the year totaled $1.7 trillion. Two-thirds of that amount was for individual ordinary life insurance. Of the $11,105 billion of life insurance in force at the end of 1993, 57.9 percent ($6,428.4 billion) was ordinary individual life insurance, which continues to be the principal type of life insurance protection for Americans This type of insurance is purchased by individuals to meet individual needs. Group life insurance in force at the end of 1993 totaled $4,456.3 billion, representing 40.1 percent of the life insurance in force in the United States. The process of risk classification is used primarily in underwriting individual life and disability income insurance. Through the process of risk classification and underwriting, insurance companies place applicants for coverage into groups or classes. Each class is comprised of individuals who pose the same or comparable levels of risk. All the members of the class pay the same premiums. Insurers attempt to achieve fairness among insureds by matching premiums to the risks presented so that all those who present the same level of risk pay the same premium. On one hand, individuals with any type of genetic abnormality-even if that abnormality is not predictive of any increased morbidity or mortality-are concerned that they will not be able to purchase insurance. On the other hand, life and disability insurers are concerned that, if an individual has knowledge of a genetic condition that is either presymptomatic or highly dispositive to developing a disease, that individual has an increased incentive to obtain higher levels of insurance without disclosing what may be a highly predictive risk underwriting factor. Health InsuranceHealth insurance is sold on group and individual bases. Most major medical insurance coverage is provided on a group basis by an employer. Insurers classify risk for health insurance for groups either by the group's own claims experience or by data from the claims experience of other similar groups in the same industry. The premium rates also are set according to these factors. Major medical coverage pays for most medical expenses incurred for hospital and physician services at a percentage of the amount billed, after a deductible has been satisfied. Many policies limit coverage to a lifetime maximum, which is rarely exhausted. The smaller the group, the fewer people there are to spread the expense of high-cost claims; therefore, insurers may medically underwrite smaller groups on an individual basis. Many states have enacted small employer laws that require insurers to accept all employees of a small employer so underwriting does not result in exclusion from the group. Some states have laws or regulations that limit or prohibit medical underwriting, impose rating restrictions that prohibit an insurer from varying rates for small groups beyond certain thresholds, or limit the degree to which an insurer can vary a group's rates based upon an individual's medical history or claims experience. Sole proprietors, small employers and individuals who apply for major medical coverage experience medical underwriting. If someone has a medical condition that the insurer determines is unacceptable because of potential high medical expenses, laws in most states allow the insurer to reject the applicant or issue a policy that excludes the preexisting condition for some period, or may never cover the condition. For this reason many states have laws that provide major medical coverage to individuals through a state high-risk pool, while a few states require an insurer such as Blue Cross/Blue Shield to accept these individuals. Insurers reject or limit coverage according to data that demonstrates that certain medical conditions-such as diabetes and cancer-will result in medical expenses. Other types of health insurance-such as long-term care insurance, Medicare supplemental insurance and limited indemnity coverage-also are medically underwritten. However, federal and state laws require insurers to issue Medicare supplemental insurance policies to applicants the first six months they receive Medicare Part B and reach 65 years of age, regardless of individual health conditions. Premiums for individual insurance coverage are set according to the individual's age, sex and geographic residence because these are reliable factors that indicate claims experience and medical expenses in the area where a person resides. With the increasing adoption of open enrollment requirements among the states, the utility of genetic information in underwriting health insurance is rapidly disappearing, since open enrollment requires the insurer to accept all applicants, regardless of health status. Despite these changes, several legislators recently have introduced federal legislation to prohibit the use of genetic information in the health insurance area and to restrict the use in other insurance lines. Availability of Insurance CoverageHealth insurance is the fundamental means for many people to obtain health care. Life insurance is a primary means to future financial security. If an individual's genetic information indicates a potentially adverse genetic condition, genetic testing could threaten the individual's ability to obtain either coverage. In response to test results, an insurer may increase premiums, exclude coverage for a condition from coverage even if the individual is healthy, or deny insurance altogether. An individual's access to health care and future financial security may be threatened or denied. Risk classification is a critical element for any insurance system. It is one step in the process insurers use to classify and divide individuals into groups with similar claims experience, and to thereby gain an estimate of expected costs. By classifying the risk associated with projected claims, this procedure protects the insurer's solvency and allows individuals in the class to pay the lowest price compatible with projected costs. Risk classification also attempts to offset the negative effect of adverse selection. Adverse selection is a situation in which the individuals most likely to purchase insurance are those with the highest risk of incurring losses. A case study on adverse selection (also known as antiselection) appears in the March/April 1996 issue of the American Academy of Actuaries' publication, Contingencies. The viability of a voluntary insurance system depends upon insurers' capacity to avoid or limit the effects of adverse selection through risk classification. To do this, insurers must have access to the same material knowledge as the insurance applicant. Risk classification also promotes equity among consumers, whereby each person pays a premium commensurate with the individual's risk. For example, nonsmokers pay lower insurance premiums than do smokers. ConfidentialityAs a medical test, a genetic test becomes part of an individual's medical record. Consumers have justifiable concerns that private medical information will be circulated to those other than the individual or his or her medical practitioner. Burden of KnowledgeLearning about a genetic condition may create a serious mental and emotional burden for an individual, depending on the condition and its likelihood or potential for injuring the individual's health. An individual has no control over the condition. Depression, hopelessness and psychological trauma are obvious concerns. Family discord arising from unknown or undiscovered hereditary conditions are possible. Finally, the knowledge may have no therapeutic value for an individual if nothing can be done to prevent or deal with the condition. The lack of therapeutic value of the testing itself, as well as of the test results are especially troubling because the testing at the outset was not done for the individual's medical benefit or by the individual's choice, but for the economic interest of a third party, the insurer. It is important to note, however, that requiring an individual to disclose genetic results from a test previously performed does not raise the burden of knowledge issue. The burden of knowledge also varies by the type of test performed. For example, informing an individual of a high cholesterol level associated with a familial syndrome is different from revealing that an individual may be at risk for developing a life-threatening condition later in life. DiscriminationA perfectly healthy individual who has a potentially adverse genetic condition (if such an individual can be properly described as "perfectly healthy") may be the object of discrimination by insurers, employers and others if these parties know about the genetic condition before taking some specified action. Similarly, an individual who has this knowledge, while others do not, may behave differently when buying insurance or taking other actions. Essentially, the individual runs the risk of being negatively stereotyped or categorized regardless of his or her current health, although insurance involves, by its very nature, the sorting of individuals into risk classes. In any case, the question arises about whether knowledge of a genetic condition will result in unfair categorization. Effect on Current PolicyholdersA policyholder who learns of a genetic condition will recognize that a change in employment may threaten health care and future economic security. The individual's freedom to move from one job to another and the freedom to move from one type of coverage to another may be circumscribed. The individual's employment may even be threatened. Finally, a healthy person with a potentially serious genetic condition may be treated unnecessarily as having a chronic, fatal disease. Regulatory OptionsWhen the working group originally met, there was substantial discussion about the possible development of a model act or regulation. This substantial discussion resulted in substantial disagreement regarding the advisability, necessity and even the capability of the working group to come to agreement on such a model.
To Table 7-1. State Positions on the Issue of Genetic Testing for Insurance Coverage
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