Noah Millman has an answer, but can’t decide if it’s liberal or conservative:
“John—This may sound fanciful, but one could imagine gene sequencing *solving* one of the big problems bedeviling risk sharing: the problem that behavior can affect risk. Right now, if a government or a company or a union provides fee-for-service health insurance to members of a group, this reduces the individual incentive to behave in ways that reduce expected medical costs – by, for example, eating right, exercising and not smoking, but also going for regular checkups and other kinds of preventative medical care. HMOs were set up in part to solve this problem, but they created a new problem in that HMOs have a strong financial incentive to deny necessary but expensive care (and they have the ability to do this in ways that traditional insurance did not). If every person had an auditable genetic risk profile, one could, legislatively, enforce the “bad math” of forbidding price discrimination based on that profile. This would leave insurance companies free to engage in price discrimination based on behavioral risk factors. Such discrimination would remove much of the incentive for healthy individuals to “defect” from the risk pool. Young people would still have an incentive to do so, but you could solve this problem with the same kind of price discrimination by age that insurance companies use for life insurance: you lock in a cheaper rate by buying life insurance while young. Insurance companies would still be incentivized not to provide coverage at all (or only at exhorbitant rates) to some people, but you could solve this problem legislatively in a variety of ways, all of which amount to “bad math” but which, if well-constructed, would not eliminate the strong individual incentives that would remain to maintain low health costs through good behavior.
“I can’t decide whether the above analysis is “conservative” or “liberal” – I’m trying to come up with a way to maintain a relatively competitive market in health-care services, and to maintain individual incentives to behave well, so that’s conservative, but a core part of the analysis is a “nondiscrimination” policy enforced by government fiat, which is a liberal nostrum. Anyway, that’s my 2c. -Noah” [with permission]