Social genetic insurance: A life-cycle perspective

Hélène Schernberg

Journal of Health Economics, 2025, vol. 101, issue C

Abstract: Temporal risk aversion can justify a social genetic insurance scheme, even in the absence of reclassification risk. I model individuals who take a genetic test in period 0 and may become ill in period 2. I show that redistributing from low-risk to high-risk individuals in period 1 can increase social welfare, even when the high-risk are not financially penalized. Temporally risk-averse individuals value reductions in the risk to their lifetime utility brought by illness, such as increased morbidity and mortality. A social insurance can achieve this by taxing the low-risk and subsidizing the high-risk. I calibrate a multi-period life-cycle model for breast cancer and Huntington’s disease and quantify the optimal redistribution. For these two conditions, which are rare, substantial transfers to the high-risk can be achieved with minimal taxation on the low-risk. Thus, the welfare of the high-risk is substantially improved with little impact on the low-risk.

Keywords: Life-cycle economics; Health economics; Genetic testing; Insurance; Risk; Welfare; Taxation (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:101:y:2025:i:c:s0167629625000281

DOI: 10.1016/j.jhealeco.2025.102994

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