How is the trade-off between adverse selection and discrimination risk affected by genetic testing? Theory and experiment

David Bardey, Philippe De Donder and César Mantilla

Journal of Health Economics, 2019, vol. 68, issue C

Abstract: We develop a theoretical analysis of two widely used regulations of genetic tests, Disclosure Duty and Consent Law, and we run an experiment in order to shed light on both the take-up rate of genetic testing and on the comparison of policyholders’ welfare under the two regulations. Disclosure duty forces individuals to reveal their test results to insurers, exposing them to a discrimination risk. Consent Law allows them to hide any detrimental information, resulting in adverse selection. The experiment results in much lower genetic tests take-up rates with Disclosure Duty than with Consent Law, showing that subjects are very sensitive to the discrimination risk. Under Consent Law, take-up rates increase with the adverse selection intensity. A decrease in the test cost, and in adverse selection intensity, both make it more likely that Consent Law is preferred to Disclosure Duty.

Keywords: Consent Law; Disclosure Duty; Personalized Medicine; Test take-up rate; Pooling health insurance contracts (search for similar items in EconPapers)
JEL-codes: C91 D82 I18 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: How Is the Trade-off between Adverse Selection and Discrimination Risk Affected by Genetic Testing?: Theory and Experiment (2019)
Working Paper: How is the Trade-off between Adverse Selection and Discrimination Risk Affected by Genetic Testing? Theory and Experiment (2017)
Working Paper: How Is the Trade-off between Adverse Selection and Discrimination Risk Affected by Genetic Testing? Theory and Experiment (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:68:y:2019:i:c:s0167629618303229

DOI: 10.1016/j.jhealeco.2019.102223

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