Donald H. Taylor, Jr. Associate Professor of Public Policy Duke Sanford School of Public Policy Duke University

Transcription

1 Donald H. Taylor, Jr. Associate Professor of Public Policy Duke Sanford School of Public Policy Duke University

2 Thanks To Colleagues But They Are Not Responsible Boston University REVEAL: Robert Green, Scott Roberts Michigan), Susan Hiraki Duke University Bob Cook Deegan, Dan Blazer: PHSE

3 Big Picture You expect insurance markets to develop when (1) the likelihood of loss is uncertain and (2) the potential loss is large Both are true for LTC About 7 in 10 use some; 3 in 10 use 0 5 in 10 use some up to 5 years 1 in 5 use 5 years+ Costs are very large

4 State of LTC Insurance Market Relatively rare (8 Million policies in force) Private market upheaval Private insurers seeking 10% 40% premium increases Use rates higher, drop rates lower CLASS portions of PPACA may be fatally flawed Goal: make LTC a normal part of young adulthood Could CLASS bridge to more private insurance?

5 Why Do People Not Buy LTC Insurance? No clear risk signal when young Most don t understand cost of LTC Many will not benefit from insurance if use LTC Medicaid crowd out Not enough wealth to protect or insure Aspects of the policies

6 Goal of Presentation Consider use of APOE 4 as a risk adjustor for LTC insurance Does it predict actual NH use? Discuss difference between actuarial fairness and moral intuitions of fairness based on availability of genetic information

7 Very Brief APOE 4 Overview You get one copy from mom and dad e4 increases prob AD e3 is most common and has average risk e2 decreases prob AD Variety of papers demonstrating e4 as a predictor of AD, but questions about selection bias

8 Methods Piedmont Health Survey of Elderly Community based sample, 5 NC counties Respondents age 65+, followed e 4 measured and then people followed Estimated admission to NH: Key variable at least 1 e4 (578 of 1,999) excl. n=90 >>>e2/e4 Control for age, sex, marital status, race

9 APOE 4 Predicts NH use e4 Status Odds Ratio NH Admission At least 1 e4 trait 1.48 [ ] Two e3 traits At least 1 e2 trait & no e [ ] Prob. NH Admission

10 REVEAL II Study Multisite RCT to assess the effect of e4 genotype disclosure on adult children and siblings of AD patients N=276, mean age 58) All got e4 genotype; randomized to different form of disclosure (how detailed/long) Baseline measure LTC insurance; follow up for changes/intent to change insurance Assess adverse selection based on e4 knowledge

11 Adverse Selection Confirmed Probability of reporting changing or plan to change LTC insurance At least 1 e4 trait: Two e3 traits: At least 1 e2 & no e4 traits: Interestingly, errors in remembrance were toward higher risk

12 APOE 4 Genotype Predicts NH use and AD Objective measure that could be used as a risk adjustor Evidence of adverse selection based on inside info of e4 status Motivates consumers to buy Would effect hold in those who haven t seen AD up close?

13 Use of Genetic Markers for LTC Insurance NOT banned by Genetic Information Non Discrimination Act (GINA) of 2008 Some states do GINA bans use of genetic markers in health insurance and employment decisions But not in: life, disability, or LTC insurance Not clear if exclusion was intended or not? No evidence that markers used in LTC Increased consumer access to genotyping

14 Increase in Access to e 4 genotyping Current reality in LTC insurance: premium increases due to higher than predicted use and lower rates of dropping policies Poor actuarial projections? Adverse selection? Will expanded consumer access to e 4 increase this phenomenon?

15 How e4 Information Could Affect LTC Insurance Markets No, No >>> status quo, no change Increase coverage unlikely Yes ind, No company>>>adverse selection Increase coverage unlikely Yes, Yes >>> actuarially fair(er) premium Increase coverage possible No, Yes company>>> actuarially fair(er) premium assigned Increase coverage possible w/mandate

16 Fairness Actuarial v. moral intuitions you cannot pick your genes If genotype good adjustor, then actuarial fairness could be better policy if goal is to expand LTC insurance coverage

17 How consumers harmed now Low risk: premium increase due to higher use for buyers Premiums higher due to assumed adv selection, pricing out low risks in first place High risk: Premium increase due to higher use Low risks driven out, reduced pool to spread risk

18 Time Magazine AD Cover Which statement comes closest to your wishes if you developed AD? 36% >>>spouse and children care for at home 20%>>> paid caregivers take care at home 37%>>> placed in asst living unit specializing in AD Stated preferences don t match reality of insurance or wealth

19 If goal is to expand coverage Full information consistent with goal actuarial fairness v. moral fairness This tradeoff needs to be discussed Coupled with a mandate obviously work better Largest policy uncertainty now CLASS could make planning for LTC normal part of being young adult Unclear if can be implemented successfully CLASS needed conference committee more than any other part of PPACA