I have no doubt that in the next few years, health policies will take into consideration factors such as those who lose weight, stop smoking and pursue a regime of physical activity. I think the question will be whether or not the consumer is sufficiently motivated to make these changes, and that will depend upon what the offered policy rate class looks like to begin with -- and whether the individual will receive the benefit of such changes -- or if they merely go to the credit of any employer or government program such as Medicare. And a key question is -- if I'm offered a preferred policy because of new behaviors -- what happens if I regress? In life insurance, once I qualify in a "preferred" risk class, I can subsequently begin to smoke, I could begin to overeat, I could get diabetes, I could fail to exercise and the insurance company is obligated to the original rate class determination.
Applying the analogy of accepting a black box in my automobile, the question for health or life insurance would be: If I subjected myself to periodic exams, would I, upon achieving a satisfactory score, receive a reward or perhaps, more applicable, a lower premium?
There are two considerations: One is industry acceptance and the other is the consumer's inclination and ability to work the system. I don't think the 50 states' Departments of Insurance who regulate this area would readily accept such dramatic changes, since they have generally resisted DNA testing as an underwriting factor. As far as consumers getting what they want, in a sense, that's already happening in some situations. For example, if I applied for life insurance and I'm offered a standard rating -- with the reason I'm not offered a more favorable rating because of my weight and lack of exercise -- I can change my lifestyle (lose weight and show physical signs of exercise) and then reapply to that or any other company and presumably get a better rate.
If affordable and accessible DNA tests could predict health factors a person is likely to manifest, those who can show they will have a relatively healthy future could request policy discounts. What barriers to this scenario do you see? What opportunities or challenges should insurance carriers consider?
First of all, I think that in the current environment, there would be an outcry from consumer advocates that would not allow that to happen.
On the other hand, employers are beginning to provide incentives and penalties for healthy lifestyle decisions. An employer providing health, disability and life insurance might pay a greater proportion of the overall premium for employees who make healthy choices and subsidize a lesser amount -- or provide less coverage -- for employees who maintain unhealthy lifestyles.