Heard this interesting point of view in a recent Planet Money podcast regarding health-insurance (link). It talks about being able to determine the risk of disease and its relation to health insurance.
For insurance to work, everyone must be involved irrespective of their risk. That way, you are not insuring only the group at risk and the low risk group subsidizes the cost of the premium for the high risk.
With medical technology improving all the time and genetic testing getting better – its getting possible for one to send in a small sample of their saliva and to determine the risk of getting some diseases (diabetes, Parkinson's, etc). It is conceivable that in the future, we will have an even better understanding of our risk to different diseases from these genetic tests. This might lead to those who have a low risk of getting sick, opting out of health insurance and those having a higher risk of disease opting in for health insurance. This could in turn mean that insurers are left providing insurance to a population group that will need costly medical insurance and in turn the insurers might have to increase insurance premiums to unaffordable levels to cover the cost of providing insurance to the high risk population – a vicious cycle.
Currently there are laws in the U.S that forbid insurance companies from using genetic information in evaluating medical risk (hint - this is a good law – the last thing we need is insurance companies coming up with new ways to bump up premiums or drop some of their clients). But consumers are free to understand their medical risk through genetic testing and this cannot be curtailed as it can be an important tool in managing ones own health.
We already know that consumers behave as described above: People opt in and out of health insurance based on their perceived medical risk – younger people typically choose the lowest cost insurance and sometimes forgo it completely. On the other hand as you grow older, you typically increase your medical insurance coverage (this is also true of families expecting a kid or those that already have kids).
So how does one deal with this issue? Solution: By requiring everyone to carry health insurance – aka – universal health insurance coverage. Sounds familiar? Its because its one of the options on the table to reform health insurance in the U.S. currently.
Surprisingly, nobody seems to be bringing up this important point that in the future we will need to have everyone under health insurance – so that the people at highest risk to health problems can be provided affordable health insurance.
Maybe right now is a good time to figure out how to get this right.