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Consumers may turn the tables on insurers
Many American consumers have long felt insurance companies are dodgy and unreliable and will do what they can to get out of paying for treatment. Genetic tests recently approved by the FDA may now give certain consumers the upper hand, and seal the fate of the already sinking long-term care insurance market.

In April, the FDA gave approval to the gene-testing company 23andMe to offer tests that can reveal whether a person is at risk for developing Alzheimer’s or Parkinson’s or some other debilitating diseases. “For companies selling long-term care insurance, these tests could be a disaster, sending risky patients in search of policies even as those with fewer risks shy away, damaging an already fragile business,” noted the New York Times.

“There is a question about whether the industry is in a death spiral anyway. This could make it worse,” says Robert Hunter, director of insurance at the Consumer Federation of America. As recently as 15 years ago, more than 100 firms offered long-term care insurance. By the end of 2015, only 12 firms offered it, and new enrollees fell from 171,000 to 104,000, according to the newspaper.

The Times used a simple anecdote to spell out the trouble for insurers. Pat Reilly, 77, a retired social worker, applied for long-term care insurance because her mother suffered from Alzheimer’s. Wary of enrolling people at risk for dementia, the insurance company tested her memory three times before issuing the policy.

But Ms. Reilly knew something the insurer did not: She has inherited the ApoE4 gene, which increases the lifetime risk of developing Alzheimer’s. “I decided I’d best get long-term care insurance,” she said.

Under the Genetic Information Nondiscrimination Act, insurers are not permitted to require gene tests or to use the results in coverage decisions, and neither can employers require gene tests or use any such results in employment decisions.

At the same time, research has shown that people who learn they have the gene variant for developing Alzheimer’s are nearly six times more likely to buy long-term care insurance than those who do not have a similar risk. “Even if just a minority of 23andMe customers decided to game the current insurance system, it’s enough to perturb the market,” reports the New York Times.

“All the insurance companies are concerned about this,” says Dr. Robert Green, a geneticist at Harvard University, who has been discussing the problem with industry executives.

The newspaper estimates nearly 5.5 million people in the United States have Alzheimer’s disease, and these patients constitute half of all nursing home residents. Yet very few people in the United States have been tested for the ApoE4 gene, thus setting up a potentially troublesome scenario for long-term care insurers as suggested above.

The FDA’s approval of 23andMe is expected to make it easier for other companies to enter the market since the new entrants would just have to demonstrate their offerings are substantially equivalent to the tests already approved. The genetic test costs $199 and all a consumer needs to do is send off a sample of saliva.

It remains to be seen whether the anticipated surge in genetic tests will uncover a ticking time bomb. In any event, consumers are unlikely to be troubled over the ethics of keeping long-term care insurers in the dark. A Harris poll conducted earlier this year found only 16% of Americans believe health insurance companies put patients before profits. Other sectors of the healthcare industry did not fare much better.

Long-term care insurance is not quite health insurance, but close enough in the eyes of consumers to be grouped with it and to suffer from the latter’s unpopularity. A favorable public image can be an asset when an industry is in the spotlight, as company CEOs and lobbyists are keenly aware.

“Positive reputations can pave the way in times of crisis, in times of transition – and when it’s critical to have a seat at the policy-setting table,” notes Wendy Salomon, vice president of reputation management and public affairs at Nielsen. The company acquired the Harris Poll in 2014.