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“No Solution to This Dilemma Exists”: Discrimination, Insurance, and the Human Genome Project

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  • Michael Hoy

    () (University of Guelph; Department of Economics)

  • Michael Ruse

    (Florida State University; Department of Philosophy)

Abstract

The debate about whether insurance companies should be allowed to use results of genetic tests for underwriting purposes is both lively and increasingly relevant as both technology and lawmaking efforts are progressing rapidly. Much concern has been raised about whether allowing firms to use such information to create risk-rated insurance premiums (genetic ratemaking) is unfairly discriminatory. We show that, especially in the context of the manner in which insurance markets operate, arguments about the appropriateness of allowing such information use by insurers which are based on discrimination are very fragile from a conceptual or philosophical perspective. Moreover, a focus on discrimination is not very helpful from a pragmatic or policy oriented perspective. We argue that adopting a Utilitarian welfare framework, as inspired by Harsanyi’s (1953,1955) veil of ignorance interpretation, in order to determine whether risk-rating by use of genetic test results is morally defensible provides a much more promising line of reasoning for settling this controversial issue.

Suggested Citation

  • Michael Hoy & Michael Ruse, 2008. "“No Solution to This Dilemma Exists”: Discrimination, Insurance, and the Human Genome Project," Working Papers 0808, University of Guelph, Department of Economics and Finance.
  • Handle: RePEc:gue:guelph:2008-8
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    File URL: http://www.uoguelph.ca/economics/repec/workingpapers/2008/2008-08.pdf
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    1. repec:dau:papers:123456789/5369 is not listed on IDEAS
    2. Hoy, Michael & Polborn, Mattias, 2000. "The value of genetic information in the life insurance market," Journal of Public Economics, Elsevier, vol. 78(3), pages 235-252, November.
    3. Marc Fleurbaey & Walter Bossert, 2002. "Equitable insurance premium schemes," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 19(1), pages 113-125.
    4. Richard V. Burkhauser & Timothy M. Smeeding, 1994. "Social Security Reform: A Budget Neutral Approach to Reducing Older Women's Disproportional Risk of Poverty," Center for Policy Research Policy Briefs 2, Center for Policy Research, Maxwell School, Syracuse University.
    5. Michael Hoy & Peter Lambert, 2000. "Genetic Screening and Price Discrimination in Insurance Markets," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 25(2), pages 103-130, December.
    6. John C. Harsanyi, 1953. "Cardinal Utility in Welfare Economics and in the Theory of Risk-taking," Journal of Political Economy, University of Chicago Press, vol. 61, pages 434-434.
    7. Wagstaff, Adam & van Doorslaer, Eddy & van der Burg, Hattem & Calonge, Samuel & Christiansen, Terkel & Citoni, Guido & Gerdtham, Ulf-G & Gerfin, Mike & Gross, Lorna & Hakinnen, Unto, 1999. "Equity in the finance of health care: some further international comparisons1," Journal of Health Economics, Elsevier, vol. 18(3), pages 263-290, June.
    8. Mattias K. Polborn & Michael Hoy & Asha Sadanand, 2006. "Advantageous Effects of Regulatory Adverse Selection in the Life Insurance Market," Economic Journal, Royal Economic Society, vol. 116(508), pages 327-354, January.
    9. Michael Hoy & Michael Ruse, 2005. "Regulating Genetic Information in Insurance Markets," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 8(2), pages 211-237, September.
    10. G. Dionne & N. Doherty & N. Fombaron, 2000. "Adverse Selection in Insurance Markets," THEMA Working Papers 2000-21, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    11. Michael Hoy & Fabienne Orsi & François Eisinger & Jean Paul Moatti, 2003. "The Impact of Genetic Testing on Healthcare Insurance," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 28(2), pages 203-221, April.
    12. Ania, Ana B. & Troger, Thomas & Wambach, Achim, 2002. "An evolutionary analysis of insurance markets with adverse selection," Games and Economic Behavior, Elsevier, vol. 40(2), pages 153-184, August.
    13. Michael Hoy & Julia Witt, 2007. "Welfare Effects of Banning Genetic Information in the Life Insurance Market: The Case of BRCA1/2 Genes," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 74(3), pages 523-546.
    14. Wilson, Charles, 1977. "A model of insurance markets with incomplete information," Journal of Economic Theory, Elsevier, vol. 16(2), pages 167-207, December.
    15. Amy Finkelstein & James Poterba, 2002. "Selection Effects in the United Kingdom Individual Annuities Market," Economic Journal, Royal Economic Society, vol. 112(476), pages 28-50, January.
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