“Most carriers are thinking of using DNA results as ways to help improve policyholders’ health—to make their lives better and longer,” says Chow. If they offer DNA testing after signing a client, not as a prerequisite for qualifying, the providers can follow up with health advice, she says. “Here are a couple of tricks, things you can do to help prevent medical problems,” she explains. “That’s a win for both sides! The policyholder gets the health improvements, and the carrier ends up paying less benefits and receiving premiums for longer.”
Yet there are potential problems with this happy scenario, Chow readily admits. First, healthy people tend not to buy insurance. “If you know that you don’t have any of these genetic markers that might lead you to need long-term care when you get older, that might deter you from buying LTC insurance,” she says. “It’s a sort of catch-22.”
Second, genetic testing is far from a perfect predictor. “Even the genetics companies warn that you can get false positives,” says Chow. “For example, I might carry the breast cancer gene mutation, but that doesn’t mean I’ll ever end up with breast cancer. It may never surface in me. So refusing to underwrite someone based on the assumption that, because of the presence of a genetic marker, she’s going to develop breast cancer would be unfair, since the data could be flawed.”
A third problem is that not all conditions can be treated. “Genetic testing can identify those more likely to develop Alzheimer’s disease,” says Foss, but “there is no effective medical intervention presently known.”
That may be true, but if genetic knowledge leads to better health overall, even if not for each individual, couldn’t it still save insurers money? “In the past, advancements in medicine have made it possible for insurers to offer coverage to more people,” notes Jack Dolan, a vice president at the American Council of Life Insurers in Washington, D.C., who has studied the effect of genetic information on the insurance industry. “For example, 50 years ago consumers who had a heart attack may have had a difficult time finding life insurance. Today, medical research and advances have enabled insurers to better assess the risk and possibly offer coverage.”
A 2009 study by Emily Oster and other researchers at the University of Chicago found that those who know they carry a genetic marker for disease are far more likely to purchase LTC insurance than those who don’t. “Individuals who carry the [Huntington’s disease] genetic mutation are up to five times as likely as the general population to own long-term-care insurance,” the report concluded.
While that may sound like good news for purveyors of the insurance, it actually could have a deleterious effect down the road, the study finds. If the customer base is disproportionately made up of people who are likely to need LTC services, the carriers will be burdened with many benefits claims. “Even relatively limited increases in genetic information may threaten the viability of private long-term-care insurance,” the report stated.
Dolan says that if underwriters don’t have access to the same genetic information as their customers, that’s a distinct and potentially costly disadvantage for the insurance providers. If, on the other hand, companies do have that information, they might choose not to cover those customers at all, or at least charge them a higher premium.
“At this point,” says Foss, “I would say genetic screening is not good news for most people trying to obtain LTC insurance.”
F. Michael Zovistoski, a managing director at UHY Advisors NY, a fee-based advisory service, puts it another way. “If we were able to segregate those with the DNA that [makes them] most likely to have Alzheimer’s,” he says, “they would conceivably be the only individuals shopping for LTC insurance, and the cost would potentially skyrocket even greater than today.”