GENETIC TESTING MAKES UNIVERSAL HEALTH CARE ALL THE MORE NECESSARY. We've known for a while that genetic testing for disease susceptibility will become much more powerful and common relatively soon. The problem is that insurance doesn't work if we can predict the likely costs of insuring a particular person. No problem you say, we'll just forbid the use of genetic information in insurance decisions as Congress is about to do. Not so fast! Even if insurance companies obey the law (which they will have extremely strong incentives not to do), it creates a new problem -- asymmetrical information.
The buyer of risk (the insurer) will have less information about the seller's condition than he or she does. This is the same problem facing buyers of used cars and was explained in a famous paper by George Akerlof called "The Market for Lemons." This is, to some extent, already a problem in health insurance, but as genetic testing inevitably improves the problem will only worsen. Smarter people than me can asses how much of a problem this is, but, combined with the likelihood that insurers will use what genetic information they can get their hands on anyway, this means that genetic testing will eventually require universal health care of some kind. Richard Posner has a conservative take here.
--Sam Boyd
