Buying Insurance Based on Your Genetics
Robert Cooke-Deegan knows exactly how to scare insurance companies. When he discusses the results of his study, titled "Genetic Testing for Alzheimer's and Long-Term Care Insurance," with industry executives, they become "heated," he says. "They say that this could put them out of business!" What Cooke-Deegan and his fellow researchers discovered is that people who take a genetic test to find out if they have traits that lead to Alzheimer's are five times more likely to purchase long-term care insurance, which would cover most of their expenses if -- or in all probability when -- they need years of nursing home care. It's like taking out a million-dollar life insurance policy the day before you know that you're going to die. The stock market would call it "trading on insider information."
Robert Cooke-Deegan knows exactly how to scare insurance companies. When he discusses the results of his study, titled “Genetic Testing for Alzheimer’s and Long-Term Care Insurance,” with industry executives, they become “heated,” he says. “They say that this could put them out of business!”
What Cooke-Deegan and his fellow researchers discovered is that people who take a genetic test to find out if they have traits that lead to Alzheimer’s are five times more likely to purchase long-term care insurance, which would cover most of their expenses if – or in all probability when – they need years of nursing home care. It’s like taking out a million-dollar life insurance policy the day before you know that you’re going to die. The stock market would call it “trading on insider information.”
Selling more insurance should be good for the industry, except insurers that market long-term care (LTC) insurance don’t ask about an applicant’s “doomsday genes.” The American Association for Long Term Care Insurance offers free insurance quotes, but its website says it is “truly sorry” that you will not be able to buy LTC insurance if you’re currently in the throes of Alzheimer’s or dementia. Its application, however, asks nothing about gene testing.
Our genetic makeup determines who we are: eye and hair color and height. We inherit our genes from our ancestors, who pass on to us both their strengths and a predisposition to certain diseases.
If a mother is diagnosed with breast cancer, oncologists are likely to recommend that her children undergo a BRCA gene test to determine if they, too, are predisposed.
The same is true with the ApoE or Alzheimer’s gene. There is no cure for the 5 million Americans diagnosed with Alzheimer’s, and the annual cost for their care is $200 billion. For LTC insurers and the medical system that bears this cost, it is truly the doomsday gene. The one-in-eight elderly Americans who live with this disease have a 75% chance of ending up in nursing care, according to Cooke-Deegan’s study. And recent data from AARP puts the annual cost at $88,000.
Those who are diagnosed are more likely to purchase long-term care insurance when they learn the hard truth. But it’s becoming more difficult. The LTC insurance industry itself is weak and ailing under the burdens of expensive claims. As the cost of eldercare skyrockets, many of the biggest LTC insurers, such as Prudential, have left the market, according to A.M. Best.
Genworth recently said that it was temporarily suspending its sales of long-term care insurance in California, which represents 12% of its market, while it seeks approval of a new product that is “priced to balance the needs of our consumers with our desire to achieve long-term profitability.”
On the same page?
Insurance is predicated on the assumption that only a certain – and usually small – percentage of policyholders will actually make claims. But genetic testing tips the seesaw in favor of customers likely to use their LTC insurance, which could cause their insurers to drown. As Cooke-Deegan points out, insurance companies have reason to be afraid.
State and federal laws such as the Genetic Information Nondiscrimination Act (GINA) forbid health insurers from discriminating against anyone because of a genetic predisposition to a particular disease.
State laws govern genetic privacy for life, disability and long-term care coverage. Some states allow those tested to keep all medical information private under the Health Insurance Portability and Accountability Act (HIPAA), except in cases where there is a court order to reveal it, according to the National Conference of State Legislators. But the law allows for many opportunities to get genetic information. Newborns can be tested at birth or when paternity is in question. Criminals are tested and volunteers for clinical trials become part of a semi-public record.
Some states permit release of genetic data when there is “actuarial justification.” Others won’t allow insurers themselves to do the testing but let them take into account the test results. Still others don’t even address the issue, seeing it as a political hot potato.
Insurance companies stress that both parties in a contract (like an insurance policy) have an equal right to know.
“LTC insurance carriers need to be on the same page with the applicant,” says American Council of Life Insurers spokesperson Whit Cornman. “An insurer must be able to know what an applicant knows about his or her health when he or she applies for coverage so the applicant, other applicants and existing customers can be treated fairly.”
Do you want to know?
“Gene testing continues to be an evolving science,” says Tom Topinka, a spokesperson for Genworth, which sells both LTC and life insurance. “Most of these tests have not made their way into routine clinical medicine.” He adds that “many of these tests are not FDA-approved.”
Inexpensive genetic tests are readily available in doctors’ offices, drug stores and on the Internet. But an undercover investigation by the U.S. General Accounting Office warned that some of these direct-to-consumer “swab the cheek” tests could be “dangerous, irresponsible and deceptive.” The AARP tells its members not to seek out genetic testing without a doctor’s support.
Very few Americans have actually undergone genetic testing. An AARP study of 1,000 people found that 92% had never had any type of testing, and most had never given it any thought.
Among those not tested, many feared that “someone else” such as employers, the government or insurance companies might get their results and use the information against them. Some were skeptical of the science of genetics. Many simply didn’t want to know.
Genetic testing was in its infancy in 1995 when Wall Street Journal science writer Jerry Bishop had himself tested and wrote a story about it. The story ended with the test results still unopened on his desk.
Nearly a third of the AARP respondents cited high cost and lack of the right medical insurance as reasons for not pursuing genetic testing. While the price of some over-the-counter gene tests is less than $100, a conclusive test could cost thousands of dollars.
Kristin, a Costa Mesa, Calif., computer technician, is a typical case. She wanted to undergo testing of her BRCA gene after her mother was diagnosed with breast cancer, but was told that the test would cost more than $3,000 because her mother hadn’t been tested first.
Oncologists say that genetic testing for breast and ovarian cancer is not only a good indicator of whether people like Kristin are predisposed to a certain disease, but also could determine the form of therapy needed if they are.
“Genetic testing is reaching the point where patients can be directed to take certain drugs and avoid others, based solely on the patient’s own genes,” says John Goodman of the National Center for Policy Analysis. “The FDA has approved a breast cancer drug only for women with a particular makeup.”
Companies that offer genetic testing want to keep client information private, and many use this in their advertising.
“We don’t do gene testing for insurance qualifications,” says Scott Lerman, a spokesperson for GE Healthcare Medical Diagnostics. “Patient information is not released to anyone unless consented to by the patient or other exception permitted by law.”
But there’s nothing to prevent an insurer from asking if an applicant has been tested and then requesting such information.
Even though most LTC insurers haven’t yet taken that step, they have found ways to protect themselves.
One way: Raise everyone’s rates. Long-term care insurance rates are rising up to 17% annually. LTC insurance, like genetic testing, has become so expensive that those with less than half a million dollars in assets probably wouldn’t benefit from purchasing a policy. Otherwise the cost of the policy would likely outweigh the ultimate benefits.
A second sneaky approach tries to hinder future Alzheimer’s patients from getting LTC policies.
“I just got LTC insurance myself,” says Cooke-Deegan. “What the underwriters have done is include a pretty elaborate set of psych tests in their intake interview, which presumably detects early minimal cognitive impairment.”
Those in need of genetic testing for any reason but afraid of the cost and consequences can find assistance. Most large hospitals now employ genetic counselors. Oncologists recommend consulting with them before you undergo genetic testing. In addition to understanding what is medically advisable, these counselors also know the ins and outs of health insurance plans, as well as your rights under state and federal laws.