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Genetic testing, income distribution and insurance markets, CHERE Working Paper 2006/3

Author

Listed:
  • Ray Rees

    (Univerity of Munich)

  • Patricia Apps

    (Univerity of Sydney)

Abstract

This paper analyses the policy implications for health insurance markets of the development of genetic testing. A central issue surrounding this development is whether insurers should be allowed access to the information provided by such tests. The paper first shows that on efficiency grounds alone, insurance buyers should be allowed voluntarily to supply this information to insurers. The source of the considerable opposition to this proposal is really the distributional implications: those with the worst genetic endowments will as a result have to pay the highest insurance premiums. The paper then goes on to analyse possible redistributional policies that can remedy this. In doing so, it makes a significant departure from the mainstream literature on adverse selection in insurance markets, by assuming that individuals have differing income endowments.

Suggested Citation

  • Ray Rees & Patricia Apps, 2006. "Genetic testing, income distribution and insurance markets, CHERE Working Paper 2006/3," Working Papers 2006/3, CHERE, University of Technology, Sydney.
    • Handle: RePEc:her:chewps:2006/3
    as

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    File URL: http://www.chere.uts.edu.au/pdf/insurance.pdf
    File Function: First version, 2006
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    References listed on IDEAS

    as
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    Cited by:

    1. Bardey, David & De Donder, Philippe, 2013. "Genetic testing with primary prevention and moral hazard," Journal of Health Economics, Elsevier, vol. 32(5), pages 768-779.
    2. Kesternich, Iris & Schumacher, Heiner, 2009. "On the Use of Information in Repeated Insurance Markets," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 280, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

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    More about this item

    Keywords

    health insurance; genetic testing;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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