HIPAA and Actuarial Temptation

As employers, we cannot be privy to individual results of any tests or health assessments (i.e. surveys of a particular person's medical history and risk behaviors). We can be given a summary of our organization's results so that we might devise educational and behavioral change (e.g. walking incentives) programs to mitigate some of the aggregate risks.

Now with direct-to-customer (DTC) genetic testing, more people have access to information that might tell them if they have any genetic risk factors. Despite the error rate of 3-8%, DTC testing has begun to increase. What if actuaries could get this information?

If I was an insurance actuary, I'd be tempted to look at a corporate group's aggregate risk factors, including the genetic testing, and compare it to the general population. Most likely, a corporate group won't be statistically significant in any difference with the general population, but it might be worth evaluating. The end result would be the creation of a premium modifier for this particular group based on these factors:

• relative rate of risk compared to the general population
• the rate of onset (or average) of the risks (like breast cancer as indicated by BRCA 1 gene presence) by certain ages
• the rate that the genetic marker occurs and the onset of the disease
• the turnover rate, average longevity of employment with this group
• the error rate of the genetic tests for each risk factor
• other modifiers?

When all is said and done, the aggregate premium modifier will probably be 1.00. It might not be worth all the bother of the calculations for each group of insureds.

As an individual, if actuaries succumb to the temptation, perhaps I just want to hide out in the general population and only get my policies in a manner that keeps me part of the general population. This might be true if I'm part of a small business. Maybe as a small business owner, I don't want to have my own group, but want to be pooled with an association of businesses, or get a policy on some of the exchanges now present after the adoption of the Affordable Care Act.