Banning Genetic Tests For Insurance Poses Threat For Consumers

Some time ago my wife and I
learned one of us might have inherited a genetic disease. Our biggest
concern was for our newborn daughter — might she be afflicted? If so,
could the results of genetic testing be used to deny her or us insurance?

Governor John Engler’s promise
in the State of the State address to prevent insurance companies from
requiring patients to take genetic tests struck a special chord with us
because it is such a misguided solution to the problem.

Insurance companies are the
target of choice for politicians. As Republican State Senator (and surgeon)
John Schwarz of Battle Creek told the Detroit News recently, “There are
members of the legislature that are too cozy with insurance companies.
This ought to be a no-brainer. We don’t want insurance companies denying
people coverage based on genetic disposition.”

The problem with this view
it represents a fundamental lack of understanding about how insurance
companies work and as a result poses a long term threat to the very existence
of private insurance.

Insurance policies for life
and health insurance first came into widespread use with the advent of
modern statistical analysis. Such methods give us important but incomplete
information about risks. Today statisticians can predict the general risk
of heart disease for a male nonsmoker in his 40s, but no one has the ability
to determine which particular men will get heart disease and which men
will remain free of heart problems.

Insurance companies distribute
risk by charging rates that adjust for this incomplete information. Those
who never suffer heart disease end up subsidizing those who do, but the
cost of insurance is spread over many individuals so the cost remains
relatively low.

Ironically, genetic testing
provides information that makes it extremely difficult to efficiently
distribute risk.

Imagine scientists discover
a gene that increases the risk of heart disease three-fold. All other
things being equal, men who test positive for this gene will load up on
health and life insurance and gravitate toward plans with the largest
benefits, while those who test negative will tend to reduce the amount
of health and life coverage they buy and gravitate toward plans with fewer
benefits and lower premiums.

As the role genes play in disease
becomes clearer, the result of this trend will be for health care costs
to rise dramatically for insurance companies as people whose genetic tests
reveal serious future health problems buy far more insurance than they
normally would and those who hit the jackpot with relatively healthy genes
buy far less insurance than they would have without genetic tests. The
insurance industry gets squeezed at both ends and may have trouble remaining
solvent even with extremely high premiums.

Isn’t there anything that can
be done to protect both the insurers and the insured? Andrew Tabarrok,
an assistant professor economics at Ball State University, suggests an
alternative solution that benefits all parties — require people receiving
genetic tests to purchase genetic insurance.

The logic behind Tabarrok’s
proposal is similar to the justification for mandatory automobile insurance
— the knowledge gleaned from genetic tests potentially imposes very large
costs on individuals and the rest of society (when individuals can’t afford
the costs of their health care.) Genetic insurance would cover just those
additional costs.

Unlike the Governor’s proposal,
which risks ballooning insurance premiums, Tabarrok’s idea might actually
lower costs in the long-term.

Since the cost of genetic diseases
is already included in current health care costs (people are already dying
from genetic diseases, after all, even if our ability to detect such diseases
is only in its infancy), Tabarrok’s proposal merely separates current
insurance policies into genetic and non-genetic components — the cost
of the combination would be no greater than the current cost of health

Since neither patients nor
insurance companies get short changed if policy holders test positive
for disease-causing genes, it is in the insurance companies’ interest
to encourage people to get genetic tests. People who test positive for
a heart disease gene, for example, could begin a low-fat diet and regimen
of exercise early in life thereby increasing the probability they will
avoid heart disease altogether. This benefits both parties by potentially
extending the life of patients and helping the insurance company to reduce
the costs spent treating disease.

The main defect of this system
is that it doesn’t lend itself very well to sloganeering. When Governor
Engler or some other politician says he’s going to solve a problem by
slapping another requirement on insurance companies, that’s a lot easier
to understand than Tabarrok’s somewhat counterintuitive (but effective)
scheme. Those who propose a more indirect route such as genetic insurance
risk being labeled as being “too cozy” with insurers.

It is quite clear, however,
that various mandates handed down to insurance companies in the past few
years are causing insurance premiums to rise dramatically, threatening
Americans’ ability to find affordable insurance. The new mandate Gov.
Engler proposes would only serve to needlessly exacerbate this trend.

U.S. Farmers Unlikely to See Turnaround Anytime Soon

Low prices for agricultural goods could continue through the year 2000, leaving
many US politicians urging a return to broad subsidies through crop and farm
insurance. According to Keith Collins, an economist with the US Department of
Agriculture, a rebound in the Asian economies is two to four years off, and
until that recovery takes place foreign demand for US agricultural products
will be weak.

And that’s got Congress ready to jump back on the subsidy wagon. After the
1996 Freedom to Farm Act, it appeared that US subsidies for farms might be on
their way out, but now Democrats and Republicans from farm states seem willing
to resurrect the system of subsidies through the back door of crop insurance.

Crop insurance compensates farmers if commodity prices fall below a certain
level. But because crop insurance encourages farmers to plant more than they
normally would, it also tends to result in larger than average crops and as
a result a greater risk of extremely low prices. In effect rather than a typical
insurance scheme, this is a roundabout way of setting a price floor on agricultural

The US would be better off getting the government out of the crop insurance
business altogether.


No quick fix seen for struggling farm economy. Joe Ruff, Associated Press,
Feb. 16, 1999.

Ending Water Shortages In India

All of the recent stories on the coming shortages in water seem to have overlooked
a key point – there are enormous amounts of recoverable water that go wasted
every year. A more rational, market-based system for water distribution would
go along way toward relieving water shortages by boosting efficiency and encouraging
recovery of wasted water.

India appears to be finally catching on to this. A recent Associated Press
story on India’s water storage notes that much of the country’s water reclamation
efforts are poorly managed. The Indian government spent billions of rupees setting
up 14 desalination plants in Ramanathpuram, for example. Today only one of those
plants is still operational; the rest have all failed due to poor maintenance
by government workers.

Similarly although many parts of India receive up to 38 inches of rainfall
annually, only 10 to 20 percent of it is actually captured – the rest washes
out to sea. Again, although there are literally thousands of tanks and water
reservoirs dotting the landscape of southern India, they are poorly maintained.

The New Delhi-based Center for Science and Environment estimates that merely
capturing the rainwater and runoff on 2 percent of India’s land area could supply
26 gallons of water per person.

India is taking an important step in starting to maintain and rebuild its
water capture and desalination facilities, but an important complement must
be market prices that give individuals and companies incentives to spend the
time and money to capture and use water efficiently.


India’s farmers tap into demand for water. Neelesh Misra, Associated Press,
March 8, 1999.

Do Good Harvests Stop War? (Or Selection Bias 101)

A study by researchers working on behalf of Future Harvest recently released
an odd report linking poor agricultural practices with war. As Dr. Indra De
Soysa sums up the conclusions of the study, “this report demonstrates that
providing developing world farmers with the fruits of research, when combined
with other measures, not only helps to end hunger, but can also contribute to
ending the increasingly vicious warfare that the world has seen during the 1990s.”

The researchers point to India, for example, which has seen both agricultural
successes and a decline in war over the past few decades.

All I can say is – are these folks serious? Of course nations that lack war
are likely to have improved agricultural success rates, but does this mean that
the latter causes the former? I think that’s a highly credulous claim.

Consider the two examples that De Soysa and his researchers compare and contrast
– India and sub-Saharan Africa. In 1960 both areas produced about 50 million
tons of food each year.

According to the Associated Press, though, by 1988 India was producing 150
million tons of food while sub-Saharan Africa was still producing only about
50 million tons of food each year. Since 1960 sub-Saharan Africa has been wracked
by numerous regional wars, while India has been relatively free of that sort
of widespread conflict (though it has had several conflicts).

What these researchers for Future Harvest are claiming is that India avoided
wars because it received food aid while sub-Saharan wars were driven because
of a lack of agricultural assistance. This is nonsense. A much better explanation
of the facts it that India’s agricultural output increased precisely because
it managed to avoid widespread conflicts, while sub-Sahara Africa floundered
because it devolved into one bloody conflict after another.

De Soysa’s hypothesis might have some currency if researchers could demonstrate
that Africa’s conflicts originated due to a lack of food, but this is undercut
by the evidence that both India and Africa started out in the same positions
when it came to food. This claim also ignores the evidence of the many African
wars themselves, few of which had their origins in a lack of food.

As it is, this study seems to get everything backwards. Peace is a prerequisite
of functional agricultural markets, not the other way around.


New report says wars are rooted in roots. David Briscoe, Associated Press,
Feb. 16, 1999.

Study Suggests No Link Between Dietary Fat and Breast Cancer

One of the shibboleths of the
animal rights movement is that eating meat is unhealthy and contributes
to diseases such as cancer. But a new report from the ongoing Nurses’
Health Study suggests at least some of those claims may not prove to be

Researchers compared the diet
of women in the study who didn’t have breast cancer with the almost 3,000
women in the study who did have breast cancer. What they found was surprising
– there was no association between consumption of fat and breast cancer.
In addition, researchers found that women who ate large proportions of animal
fat were at no greater risk of breast cancer than those who didn’t.

As the researchers summed
up their findings in the Journal of the American Medical Association,
“Our research indicates it’s highly unlikely that women who consume
a low-fat diet are protected against breast cancer. Equally it appears
a high-fat diet also poses no increased risk for the disease.”

There are some limits to study,
though. It only looked at a 14-year time period, and the results of low
fat diets may require longer than 14 years to show any decreased risk.
In addition, the study didn’t look at women with extremely low fat intakes
of 10 percent or less of total calories.

There is one bright spot for
animal rights activists in the study, though – it does contradict results
of animal studies which found associations between high fat diets and


No link between dietary fat and breast cancer, study shows. Brenda Coleman, Associated Press, March 9, 1999.

Horne Loses His Appeal, Other Animal Rights Terrorists Going to Jail

In some good news on the animal
rights terrorism front, hunger striker-extraodinaire Barry Horne recently lost an
appeal of his conviction for a fire-bombing campaign in the United Kingdom.
Horne, 46, was sentenced in 1997 to an 18-year prison sentence for the

Horne’s fellow UK animal rights
activist and former spokesman Anthony Humphries was recently sentenced
to spend 7 years in jail for conspiracy to cause explosions and possession
of explosives. Humphries planned to firebomb drug firms that tested on

Closer to home, two Michigan
women were sentenced for their role in a raid on a Canadian mink farm.
The two women, Hilma Ruby and Patricia Dodson, plead guilty and were sentenced
to 90 days in jail and ordered to pay $34,000 apiece in fines for releasing
1,540 mink from the farm. According to the Canadian Mink Breeders Association,
this marks the first time a Canadian court has handed animal rights activists
jail time for a raid on a fur farm.


Their only crime was compassion… Frontline Information Service, Press Release, March 18, 1999.

Two Jailed in Canada Mink Farm Raid. Associated Press, February 22, 1999.

Animal activist loses appeal. The BBC, February 26, 1999.