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Innovation Agents

Why 23andMe Terrifies Health Insurance Companies

The FDA's threat to the Google-funded makers of a $99 genetic test is a victory for insurance companies concerned about their business model.

  • 01 /06 | FDA Letters
  • 02 /06 | Insurance
  • 03 /06 | TV Commercial
  • 04 /06 | Privacy
  • 05 /06 | Building Partnerships
  • 06 /06 | Building a Data Set

The FDA dealt a blow to 23AndMe Monday morning, ordering the makers of a $99 DNA test to halt marketing of the product. And at least one interest group watched eagerly from the front row: health insurance companies. 23andMe’s tests, designed to tell people if they're at risk for certain health conditions, could lead to an increase in care—necessary or not—which insurers could end up covering.

Here's a hypothetical. Say 23andMe's results indicate a 30-year-old client has the three most common BRCA1 and 2 gene mutations that 23andMe tests for, suggesting high risk for breast cancer. That person might book an appointment with a doctor, an appointment she might never had made without the DNA results. The physician might recommend a mammogram, a test a thirtysomething would not normally get. In more extreme cases, such as the much-talked about case involving actress Angelina Jolie, someone with particularly alarming results might decide to get a preventative mastectomy. Insurance companies are concerned that they'll end up paying for every step.

At the same time, health insurers can’t increase premiums for these potentially expensive customers because of the Genetic Information Nondiscrimination Act (GINA), a law that makes it illegal to do just that. The logic goes: People don’t get to pick their genes, so it’s unfair to penalize them for the unfortunate bad luck of having a predisposition to Alzheimer’s.

GINA does not, however, extend to long-term-care insurance. Some states ban discriminatory use of genetic information in all areas, but there's no federal law. "A company can use your genetic information as part of their decision in your coverage," Jennifer Wagner, a lawyer who works out of the University of Pennsylvania's Center for the Integration of Genetic Healthcare Technologies (and a 23andMe customer), told Fast Company for our November cover story. But would you be required to disclose results of a genetic test? Or even that you've been tested? It's not hard to imagine people getting their 23andMe results back, finding out their likely to get, say, Alzheimer's, and then rushing out to buy a long-term-care policy. If too many people did that, there would be no business model for long-term-care insurance companies who'd end up covering care for a skyrocketing percentage of customers.

In practice, it’s unclear exactly how these preventative procedures would fit into the insurance landscape. "Physicians have told us that the biggest problem with 23andMe is that we generate non-billable questions," Wojcicki said at Fast Company's recent Innovation Uncensored event in San Francisco. Meaning, at this early stage, providers don’t know how to bill for preventative care based on genetic tests. "If a patient goes to their doctor and says 'I'm at high risk for a blood clot, what do I do?' the doctor will say, 'Come back to me when you have a blood clot,'" Wojcicki added.

The fact that health insurers can’t factor these expenses into their plans makes them uneasy. "What these executives make clear is they are a business, and if consumers of their business have information that they [themselves] do not have in order to practice their underwriting, they cannot function," Dr. Robert Green, a medical geneticist and genomics researcher at Harvard Medical School told Fast Company for our November cover story. Insurance, after all, is economics, and economics doesn’t do well with uncertainties.

Since 23andMe has made genetic information more accessible to the general public, health insurer concerns about the costs of gene-based care have risen. In 2012, UnitedHealth put out a report "about the accuracy and affordability of the tests." Inaccuracies, a concern also cited by the FDA, might lead people to seek unnecessary (and costly) care.

Of course, those fears don’t include the situations in which preventative procedures lead to healthier people with lower overall health expenses. Insurance companies should like that since, in theory, sick people generally cost money. But, as Wojcicki explains in the video above, insurers don’t always think in terms of qualitative outcomes, but economics. "The system around you is not necessarily aligned with your incentives."

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