Wharton’s Jean Lemaire and Arupa Ganguly of the Hospital of the University of Pennsylvania discuss the implications of genetic tests on insurers.
An inexpensive gene test for Alzheimer’s disease by 23andMe has been used for years in countries such as Sweden, and it hasn’t made a ripple because of universal health care. But in the U.S., genetic testing could lead to a perfect storm for the insurance industry. Wharton statistics professor Jean Lemaire and Arupa Ganguly, a genetics professor who runs the Genetic Diagnostic Laboratory at the Hospital of the University of Pennsylvania, recently analyzed the implications of genetic tests on insurers on the [email protected] show, which airs on SiriusXM channel 111.
An edited transcript of the conversation follows.
[email protected]: Let’s start with the APOE 4 gene and its role in Alzheimer’s disease.
Arupa Ganguly: The APOE 4 is one of the four forms (or alleles) in which this gene comes. There are different versions of it — e2, e3, e4. People who carry this APOE 4 allele have a higher risk of getting Alzheimer’s disease. The e2 allele is a risk-reducing allele, whereas e4 is a risk-enhancing allele. Someone who is born with two copies of the e4 will have a 15-fold increased risk. Someone who has only one copy of it has a four-fold increased risk of having Alzheimer’s.
But this is not really the familial form of Alzheimer’s disease for which there is a whole different set of genes that are tested. The e4 allele is what we talk about when we are talking about people without any symptoms or family history, but who are concerned about their future risk.
[email protected]: Obviously, it’s a big impact on a person’s life when they find out they have this gene and the potential for the disease.
Ganguly: True. This allele testing usually is done in the context of someone who is already affected, is going into a clinical trial or just before they are symptomatic. … But this test will allow an individual like me to just spit into a tube and get the results and find out the status of the gene in my system. That can tell me what is my risk from this particular gene of getting Alzheimer’s. It impacts because it’s not an easy piece of information to deal with, mainly because you cannot prevent it. Genetic information is something that one has to live with; they cannot change it.
“For insurance companies selling long-term care insurance, this is actually the perfect storm.” –Jean Lemaire
There aren’t any guidelines right now on how to prevent the onset of Alzheimer’s disease. Maybe it can be delayed somewhat, but the final onset will happen. The allele increases the risk, but it is not the only factor that is going to determine whether the person will get Alzheimer’s or when.
[email protected]: Is there hope that through greater understanding we will be able to find a cure for Alzheimer’s?
Ganguly: Yes. The company that does the testing, 23andMe, will allow you to share this information with your physician and others so that you can be part of future clinical trials, future preventive protocols and things like that. But I think personally, the information has so much emotional impact, so much economic impact — meaning what’s going to happen, who’s going to take care of me in the future — that it leads us all to think about long-term care insurance.
I’m concerned that if someone wants to be proactive, doesn’t want to burden his or her family … financially, what are the options they will have? If you can afford it, try to plan to have long-term care insurance. And if [those plans don’t work out], that’s going to be a very devastating consequence of having this information and not being able to do anything.
[email protected]: Jean, when you look at the insurance industry as a whole, long-term care options have been dwindling over the last decade or so. What is the impact on the industry of having this type of diagnostic ability with Alzheimer’s?
Jean Lemaire: The long-term insurance is in trouble already. A few years ago, about 100 companies were offering it. Now it’s down to 12. Essentially, people signing up for that policy are much sicker than expected, and this is the problem for insurance companies. Policyholders do self-select, people buying annuities do live longer, people buying term insurance live a shorter life, people buying long-term insurance have problems. The problem that we know is adverse selection, people trying to take advantage of some information that they have and that they don’t have to reveal to their insurance company.
For insurance companies selling long-term care insurance, this is actually the perfect storm. There’s an inexpensive test, less than $200, which is highly predictive of a very expensive disease that consumers may not have to reveal to their [insurer]. It seems to be a real worst-case scenario for insurance companies.
Ganguly: There is a dichotomy there. We want insurance, but we cannot get insurance if we reveal why we want insurance. That’s why it is a perfect storm. The people who find out they don’t have the bad allele will not go for this long-term care insurance, which is expensive. I have long-term care insurance through the university, but it’s still not inexpensive. And the sooner you start, the less expensive it is.
But as time goes on and people become more and more aware of it, I don’t know how people are going to play it out in terms of disclosing whether they have had gene tests and what are the results of the gene tests. As much as I can understand from the insurers’ point of view that this is like a selection for the sick people who want to have the insurance, I don’t know the solution without a universal health care system or something like that.
[email protected]: There is the potential for states to opt out of certain elements of health care, and long-term care could be one of them. That could have quite an adverse effect on consumers and the industry.
Lemaire: Yes. It is a tremendously expensive disease. If you are to stay in a good nursing home in the United States, you are talking about $100,000 a year. With Alzheimer’s disease, you are talking about possibly five, six, seven years. It is a very, very expensive claim. We do face this possibility that only high-risk people will purchase insurance. Insurance companies will need to increase their prices because people who test negative will drop out of the market. We call that the death spiral, meaning policies becoming more and more expensive, insuring a smaller and smaller proportion of people. Insurance may not be the solution or the only solution there.
[email protected]: It seems like we could be heading to a point where the companies would logically assume that if somebody is buying long-term care insurance, they are sick.
Lemaire: Yes. Right now, they are not allowed to ask any questions. Society has to decide which questions can be asked and which questions cannot be asked. Questions about race, religion, national origin, sexual orientation cannot be asked even though there may be significant statistical