

Why 23andMe Terrifies Health Insurance Companies  - r0h1n
http://www.fastcompany.com/3022224/innovation-agents/why-23andme-terrifies-health-insurance-companies

======
DanBC
> Here's a hypothetical. Say 23andMe's results indicate a 30-year-old client
> has the three most common BRCA1 and 2 gene mutations that 23andMe tests for,
> suggesting high risk for breast cancer. That person might book an
> appointment with a doctor, an appointment she might never had made without
> the DNA results. The physician might recommend a mammogram, a test a
> thirtysomething would not normally get. In more extreme cases, such as the
> much-talked about case involving actress Angelina Jolie, someone with
> particularly alarming results might decide to get a preventative mastectomy.
> Insurance companies are concerned that they'll end up paying for every step.

This seems reasonable. Someone does a genetic test, gets a result, and sees a
proper doctor to discuss the results. If that person has a strong family
history, and has the mutated genes, they might take preventative action which
imght include surgery.

Insurance companies should be paying for that.

It's not like someone's got a whole body CT scan and is then getting
unnecessary tests from the uncertain results of the scan.

> At the same time, health insurers can’t increase premiums for these
> potentially expensive customers because of the Genetic Information
> Nondiscrimination Act (GINA), a law that makes it illegal to do just that.
> The logic goes: People don’t get to pick their genes, so it’s unfair to
> penalize them for the unfortunate bad luck of having a predisposition to
> Alzheimer’s.

I expect to see a bunch of people who don't disclose their 23andMe results and
who then have their insurance cancelled.

Insurance companies have departments dedicated to finding ways to avoid paying
out. See, for example, the woman who was about to get treatment for breast
cancer when her insurance company cancelled, stating her undeclared visit to a
dermatologist for acne several years earlier.
([http://edition.cnn.com/2009/POLITICS/06/16/health.care.heari...](http://edition.cnn.com/2009/POLITICS/06/16/health.care.hearing/))

~~~
bayesianhorse
Preventative mastectomy in this specific case might actually save money.
Breast cancer is not guaranteed, but the risk multiplied by the costs should
work out profitably.

Also, in other countries than the U.S., insurers are supposed to maximise well
being and life expectancy...

~~~
kissickas
Exactly - I fail to understand how, if the person is already at a higher risk
for breast cancer, how an earlier screening could increase costs.

Isn't a mastectomy for a 35-year-old cheaper than paying for years of
chemotherapy for a fragile 80-year-old person whose cancer has already spread
too far for surgery and needs to be hospitalized for months on end?

------
forgottenpass
This type of conspiratorial nonsense would be thoroughly trashed here if a
startup was "the big guy" in this story. Instead the nonsense flies because
the FDA is the baddie here. People are just telling themselves things and
don't care to find out why they took action against 23andMe in specific, or
their regulatory purpose in general, mixed with generic gov't mistrust. Bring
in guesses about financial benefits to larger companies and you've got a stew
going.

I've had a professional relationship with the FDA for a few years. Sometimes I
like what they do, sometimes I don't. I'm not going to show my hand on how I
feel about them (or their 23andMe action) any more than that. Ever since the
FDA sent the warning letter, the reaction online reminds me of the Pavlovian
whining I hear from folks in the industry every time the FDA issues new
guidance that effectively says "don't cut corners X Y and Z" regardless of the
merit in the FDA decision. You'll have to forgive me if I'm unsympathetic, I
read way too much of what comes out of the FDA to stomach the broad knee-jerk
against everything they do, or middle management suits just looking for
something to bitch about.

edit: Rolled my already not-saying-anything about the FDA back even further,
I'm talking about the response:
[http://i.imgur.com/tAfqLKY.png](http://i.imgur.com/tAfqLKY.png)

~~~
naterator
It's not so black an white:
[https://news.ycombinator.com/item?id=6794122](https://news.ycombinator.com/item?id=6794122)

------
joosters
Does it harm insurance companies? Or does it in the long term harm us, the
consumers?

Here's a hypothetical example: Say there's a horrific genetic condition (let's
call it 'The Lurgy') that would involve lots of expensive treatment if you
developed it. Now, a cheap genetic test kit comes along that can give an
accurate prediction of whether or not you are likely to eventually suffer from
the lurgy. What happens?

The first effect is that more people test themselves, and go out to buy
quality healthcare plans if they see that they are going to get the lurgy.
These people might not have otherwise bought the insurance. Result: the
insurers suddenly get a much higher % of lurgy sufferers. Their costs rise,
and this pushes the insurance price up. This exacerbates the problem: Non-
lurgy people are less likely to buy the insurance. Worst case, the cost of
insurance comes close to the general cost of treatment, meaning that the
insurance is useless.

BUT: The obvious counter to this is that the insurance companies can adjust
their range. They can split their insurance offerings up into two products:
One that covers the lurgy, and one that doesn't. People are free to buy
either. Naturally, the lurgy-inclusive policy is much more expensive. Suddenly
the risk is back on to the consumers. They don't have to declare their genetic
tests, and the insurers can't force them. But now they can't afford _not_ to
take the genetic test and buy the appropriate insurance (and in so doing,
effectively 'declare' their genetic test results - after all, you'd buy the
cheaper insurance if you could)

So the endgame is that everyone suffers. You can imagine a world where there
are genetic tests for all kinds of disorders and combinations of insurance
coverage that cater for all. But now the insurance pools are smaller, the
uncertainty of costs is reduced, and so the insurance costs come closer to the
expected costs of treatment. i.e. insurance costs are high, the insurers still
profit, and the benefit to the consumer is vastly reduced.

~~~
jckt
Does it make sense to buy insurance if you take a hypothetically accurate
genetic test? The business of insurance companies only makes sense (at least
to me) if we are talking about preparing for uncertain loss. But with a
genetic test kit (and for argument's sake let's assume it's very accurate) the
concept of "uncertain loss" flies out the window, if not at least vastly
different from its current conception.

Doesn't this just mean the eventual death of health insurance completely?

~~~
joosters
At the extreme, imagine a future world where long term health is so
predictable that there's no uncertainty. You definitely can't offer an
optional insurance policy here (at least, the insurer either isn't going to
make any money, or the policy costs will make buying it pointless). In a
similar way, you won't do very well selling retrospective fire insurance, as
only those people with burnt-down houses will buy it.

Insurance needs 1) a large pool of coverage, where the combined average costs
will cover the peak extremes. It also needs 2) variability: you have to have
people with lower-than-average costs to balance out the higher-than-average
costs. If everyone has average costs then once again, you've lost the
uncertainty and any benefit of insurance.

To get 1), you could enforce insurance on people. To get 2), you have to
ensure insurance products aren't ultra-specific. Neither of these are popular!

~~~
fennecfoxen
If you're in a world where long-term health is so predictable there's no
uncertainty, there's no need for insurance on your long-term health. What you
want is _some structure to pay for your long-term health care_.

You are certainly free to advocate for your government to initiate a wealth
transfer. Perhaps you will also consider a variety of ways of conducting this
wealth transfer. (On that note, our current approach of "make young people buy
more expensive insurance or get fined to pay for it" is a dubious one, and
quite regressive.)

~~~
joosters
I don't think this is true. Let's say that a child from a poor family is
discovered to have a rare heart condition that would require very expensive
treatment. Should they be expected to pay for it? Should we just let them die
if they can't? Isn't this the kind of situation that healthcare insurance is
designed to fix?

~~~
fennecfoxen
The situation you propose and the situation the grandparent poster proposed
are different. He proposed total foreknowledge of future health outcomes.
Unrealistic? Yes. Different from what you just proposed? Also yes.

Insurance is designed to restructure uncertainty: it replaces a tiny risk of
needing HUGE AMOUNTS OF MONEY with a 100% risk of paying a small amount of
money. If the long-term health outcomes are known, as he proposed, then there
is NO UNCERTAINTY about it. You either need the huge amounts of money to pay
for care, or you need no money. All else being equal, the same amount of money
is needed, and _less_ money is spent on the overhead of running an insurance
company and paying off the capitalists in charge of it.

Now, if you'd like to argue that __society has a duty to assist someone who
needs this care __by transferring wealth to them to cover cost of the
healthcare procedures they need, that 's a perfectly legitimate thing to
argue. It's also another matter.

~~~
joosters
Fair point. I was confusing/merging health insurance and some generalised form
of 'health coverage' in my last post.

Even in a situation with no uncertainty, you can still have forms of personal
health insurance, e.g. you have a system where everyone is enroled, everyone
pays and everyone gets the same cover. The collective benefits of insurance
still apply, even if one individual's outcomes and costs are known. Whether
this system counts as 'healthcare insurance' or it is now a 'national health
service' just depends on how you want to name it...

------
jonknee
This article is a blast from the past. The past before having health insurance
was required and when pre-existing conditions could be omitted from coverage.

The worst case scenario they used was if someone at risk for breast cancer got
mammograms early. The horror, but also the cost savings from early detection!
If you claim your grandmother had breast cancer you will no hassle getting a
mammogram at an early age, there should be no difference if you have genetic
hints at the same risk-factor. No insurer would pay for a preventative
mastectomy without strong medical evidence (e.g. not just a genetic test),
there's no sense in bringing up a world-famous rich actress who almost
assuredly paid for her surgery out of pocket.

The most expensive thing for a health insurer is the customer who doesn't get
a mammogram when she should.

~~~
yummyfajitas
Customers getting pointless preventative care such as mammograms before age 50
increases costs in two ways. First, the mammograms cost money. Second, the
mammograms make the patients less healthy (via stress, unnecessary biopsies,
infections caused by the biopsies, etc) which costs even more money.

Luckily Congress is looking out for women and passed a law requiring medically
useless tests.

[http://www.bloomberg.com/news/2012-07-31/in-mammogram-
debate...](http://www.bloomberg.com/news/2012-07-31/in-mammogram-debate-
politics-trounces-science.html)

[http://www.uspreventiveservicestaskforce.org/uspstf/uspsbrca...](http://www.uspreventiveservicestaskforce.org/uspstf/uspsbrca.htm)

------
jdale27
This is a bunch of speculative nonsense. As the article itself finally admits
in the last paragraph, there are "situations in which preventative procedures
lead to healthier people with lower overall health expenses". In other words,
the additional care that 23andMe customers (might) request can actually help
insurers. But let's not let that stop us from painting a startup David vs.
BigCo Goliath story and bashing the big bad insurance companies...

------
nodata
Why aren't the health insurance companies pleased? Doesn't early detection
save them money?

~~~
yummyfajitas
Genetic information that the insurance companies cannot use to price insurance
leads to adverse selection. If insurance companies were permitted to use (and
demand disclosure of) genetic tests, it wouldn't affect them.

Consider a world without GINA/other regulations and with simple actuarial
pricing of insurance. Say you have a 1 in 100,000 risk of a disease costing
$10k before a genetic test. After the genetic test, you risk is either 1 in
1,000,000 (if negative) or 1 in 10,000 (if positive). The insurance company
would charge you $1.10 for a policy if untested, $11 for a policy if tested
positive, and $0.11 for a policy if tested negative. These policies result in
a 10% profit per person (ignoring admin costs, etc). If you lie about getting
tested, that's grounds to revoke your policy.

As a result of GINA, people can get tested but the insurance company can't
price insurance accordingly. As a result, the people with a negative test will
drop coverage while people with a positive result will buy it, and prices will
have to go up. If everyone behaved this way, then P(disease|buys insurance) =
1/10,000 in spite of the fact that P(disease)=1/100,000. Prices will rise to
$11.

Price increases will reduce the quantity purchased (resulting in lower
profits) and result in political/regulatory pushback.

~~~
jonknee
This is just fake posturing by insurance companies, their risk is unchanged in
the post-ACA marketplace. Policymakers aren't all stupid, this scenario is
exactly why having health insurance is now a requirement. As you noted, it's
quite risky to both cover all pre-existing conditions and not have a mandate.

~~~
yummyfajitas
Not everyone will buy insurance even with ACA (I don't plan to, now that cat
coverage is illegal) and genetic tests can cause people to select Platinum vs
Bronze plans (or whatever the exact categories are).

~~~
jonknee
It's not perfect yet because true universal coverage was not politically
viable (even this giveaway to private companies--formally _the_ GOP's desired
solution--was politically unacceptable to the GOP). Choosing plans will happen
annually, it doesn't take a genetic test to figure out you'd save money with
another plan.

Why aren't you going to get coverage? If you mean catastrophic coverage, the
exchanges have them if you are young (under 30) or poor. It's not a terribly
smart plan to have now that the other plans are available, but to each his
own:

[https://www.healthcare.gov/can-i-buy-a-catastrophic-
plan/](https://www.healthcare.gov/can-i-buy-a-catastrophic-plan/)

If you're not poor you really should buy insurance, besides the obvious health
benefits you're going to be paying 1% of your household income as a penalty in
2014, 2% in 2015 and 3% after that. Many people would pay more in penalties
(and get _nothing_ in return) than they would for getting insurance, it's a no
brainer.

~~~
yummyfajitas
Your own link shows catastrophic plans are not really catastrophic plans -
they cover all sorts of non-catastrophies like preventative care, a therapist,
maternity, etc ([https://www.healthcare.gov/what-does-marketplace-health-
insu...](https://www.healthcare.gov/what-does-marketplace-health-insurance-
cover/)). It's moot since I'm over 30. In any case, I was never able to figure
out what insurance would cost me, since the website doesn't work.

Also I only live in the US part of the year, and it's unclear which state I'm
even allowed to buy insurance from (I have no US address right now). I'd
certainly be paying for months of care I couldn't use since you can't buy
month to month.

Lastly my income is low right now since I'm building a startup, so 1% won't
hurt me much.

~~~
jonknee
> Your own link shows catastrophic plans are not really catastrophic plans -
> they cover all sorts of non-catastrophies like preventative care, a
> therapist, maternity, etc

... Only a percentage (60%) and only after you reach the deductible (in my
area that's over $6k), which is how these sort of high-deductible plans work
(and is what I currently have because that's what was available before the
exchanges). Again, from my link:

> A catastrophic plan generally requires you to pay all of your medical costs
> up to a certain amount, usually several thousand dollars. Costs for
> essential health benefits over that are generally paid by the insurance
> company.

Unlike a high-deductible plan that you may have now, the new ones do provide
for 3 primary care visits annually as well as preventative care (essentially
screenings and vaccines which end up saving everyone money).

> Lastly my income is low right now since I'm building a startup, so 1% won't
> hurt me much.

Since your income is low you would qualify for a subsidy and likely be able to
get insurance for little to no cost. Or you could be bankrupted by some bad
luck and pay a penalty for the privilege.

------
antirez
Just another reason why private health care as default is a broken concept. It
is already broken from an human standpoint as it makes people in a very hard
moment of life to care about money, and the more it will be possible to
predict illness in general, the more broken it will be for the reasons
expressed in the article.

------
Houshalter
>At the same time, health insurers can’t increase premiums for these
potentially expensive customers because of the Genetic Information
Nondiscrimination Act (GINA), a law that makes it illegal to do just that.

Wth? Do people not understand the point of insurance?

This also stifles innovation since they would otherwise have an incentive to
invest in this technology. And more importantly it would save people's lives
if the insurance made them take tests and caught this stuff early.

------
md2be
Why fastcompany writes misleading headlines?

------
michaelochurch
Health insurance is the obvious dinosaur. It has no place in modern society,
except perhaps for cosmetic surgeries. People should get all the medical
treatment they need, full stop.

If we still have private health insurance in 2050 then we have failed, and
society will probably be like in that rock opera, "Repo! The genetic opera."

Also, we all know that they'll be the first ones to use genetic data against
people.

------
omonra
What's the tldr? Can't be bothered to watch a video of someone talk when it
could as well be written down. My ability to skim or parse a written page is
significantly faster.

~~~
damncabbage
Scroll down.

~~~
omonra
Thank you. Guess design was too clever for me :)

