The Agenda

Razib Khan’s Genome Pledge and the Future of the Health System

Razib Khan, author of a ridiculously stimulating blog, is trying to get the ball rolling on a new genome pledge:

I expect to get my full genome sequenced in a few years, at the latest. When that happens, I’ll try and place it online at a public repository. Why? There’s something of a chicken and egg issue with the utility of genomes. The more you have out there, the more juice you can squeeze. I’m going to add phenotypic information too. You probably aren’t surprised by this stance from me, but I just realized that if there are ~30,000 human genomes sequenced right now…it’s probably impossible logistically and bureaucratically (and perhaps computationally, right now) to analyze them all at the same time. The 1000 Genomes is going to make a big difference. But if you look at their list of populations surveyed over time you’ll see that there have been several false-starts, probably due to bureaucratic problems.

Perhaps I’m naive, but my thought is that it’s fine to look at common diseases and common variants. But how are we going to find rare variants if we can’t pool lots and lots of individuals? I suspect it’s a matter of time anyway, and why not push on the margin? I invite readers and other bloggers to make the same pledge.

I pledge to do the same. As commenter Sherry Nouraini observes, however, Razib’s pledge raises the concern that insurers might take note of one’s risk factors. This brings to mind an article from 2007 by economist Stephen Cecchetti:

A single-payer, publicly run, health-care system is the inevitable consequence of the nearly continuous scientific revolution in molecular genetics that began a half century ago. One day it is James Watson, one of the discoverers of the structure of DNA, being handed the complete genetic code inside his own cells. The next day, researchers tie yet another chronic disease to the presence of specific patterns on individual chromosomes. And then, a few days after that, we learn that scientists are learning to make stem cells from skin cells.

The time is fast approaching when we will have an inexpensive test that is capable of revealing a person’s genetic propensity to contract a broad array of chronic diseases. That means that we will be able to accurately assess the cost of medical treatment over their lifetime. …

Imagine that the insurance company can’t distinguish the two types, so it charges all comers the average cost across the entire population. For the healthy people, the cost of the insurance will look very high, so they won’t buy it. That means that the only people who will buy the insurance are the unhealthy. Realising this, the insurance company will have to raise their price further to compensate for the fact that only the high cost people are willing to buy insurance. This is the classic “lemons” problem that causes markets to fail and was first described by George Akerlof.

Alternatively, if my insurance company can obtain my health score, then, in the same way that lenders use my credit score to calibrate the interest rate they offer on a loan, they will adjust my health insurance premium based on their precise estimate of the cost of my future medical care. And, importantly, a clever insurance company that is precluded from learning my health score directly will find a pricing scheme that leads me to reveal it to them through the choices that I make.

The fact that private insurers can accurately compute customer premiums to reflect expected future payouts means that the insurance market will break down. Insurance is about shifting risk, pooling large groups of undifferentiated individuals. When either the insurer or the insured can forecast future events, and accurately distinguish one person from another, the rationale for insurance disappears.

Though Cecchetti makes a strong case, I disagree that a single-payer health system is the inevitable outcome. Rather, the genomic revolution will require a rethinking of the health safety net. It really is inevitable that the taxpayer will foot the bill for many individuals with chronic ailments, etc. Yet a more market-oriented health system might also lead to more efficient providers, including more efficient providers of services to the most expensive patients, who account for an extraordinarily high share of system-wide costs. This means that the public backstop for those with the most expensive ailments might prove cheaper than under system-wide central planning. Another way of putting this is that we can easily imagine the market working reasonably well for people without ailments like Huntington Disease while a more centralized system aids those who have them. 

Reihan Salam is president of the Manhattan Institute and a contributing editor of National Review.
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