Genetic discrimination occurs when an insurance company treats a person differently because he or she has a gene mutation that increases the risk of an inherited disorder. At the national level, the Genetic Information Nondiscrimination Act (GINA) is designed to protect people from genetic discrimination. Title I of GINA prohibits genetic discrimination in health insurance. It is illegal for health insurance providers to use genetic information in making decisions about a person’s insurance eligibility or coverage. GINA does not apply when an employer has fewer than 15 employees. GINA also does not protect against genetic discrimination in the provision of life insurance.

What are the implications of genetic testing for adverse selection in the market for health insurance? The information from genetic testing could help insurance companies estimate the likely cost of health insurance for each customer. This new information would increase insurance prices for high-cost customers and decrease prices for low-cost customers, and reduce the adverseselection problem. A ban on genetic discrimination prevents these sorts of price changes.

Question.

What is adverse selection for sellers?

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