Genetic diseases should be covered by insurance
The economic rationale behind insurance is based on the assumption that even though a large number of policyholders regularly pay their premium, a relatively smaller percentage of them will actually make a claim. That being the case, all that the insurance company needs to do is ensure that its policyholder surplus is positive so that whenever a claim is made, there is enough money in the bank to pay it out.
Critical to this is ensuring that policyholders do not defraud insurers by, for instance, taking out an insurance policy immediately after they come to know that they have a medical condition. It is in order to minimize this risk that insurance companies typically include, in their insurance policies, specific contractual exclusions against pre-existing conditions. With this, if it later comes to light that the insured person was aware of his or her medical condition at the time of taking out the insurance, that knowledge would be a valid ground for denying his insurance claim.
In 2013, the Insurance Regulatory and Development Authority of India (IRDA) issued guidelines on standardization in health insurance which contained specific exclusions in respect of “pregnancy, infertility, congenital and genetic conditions”. Shortly thereafter, insurance companies throughout the country amended the terms of their policies to specifically exclude genetic disorders from insurance contracts and claims.
It is not entirely clear what prompted the government to add “genetic conditions” to the list of standard exclusions. There is no denying the fact that these diseases are written into our DNA and therefore, by definition, are pre-existing conditions. However, the term used is so broad and capable of covering such a wide range of diseases that it would exclude far more diseases than is warranted.
As our understanding of the human genome has improved, we have begun to discover that more and more diseases can be explained with reference to certain specific imperfections in our genetic code. With this new knowledge, these diseases have begun to be re-characterized as the consequence of variations in our DNA, falling, as a result, within the exclusions applicable to genetic conditions. As insurance companies have increasingly begun to rely on this exclusion to avoid paying out insurance claims, claimants are beginning to find that their insurance claims for diseases that were previously covered are being denied. If this is allowed to continue, there is no doubt in my mind that things will get to the point were the fundamental premise on which the entire medical insurance industry operates, will stand irrevocably de-stabilized.
Last month, the Delhi high court had reason to examine this issue, in the case of United India Insurance Co. vs Jai Parkash Tayal—a case involving a patient whose insurance claim had been denied because he had been diagnosed with hypertrophic obstructive cardiomyopathy—a disease that could be classified as a genetic disorder.
While rejecting the claim that insurance was not payable because it was a genetic disease, the high court held that the term genetic disorder is vague and should not be used as the ground for exclusion of insurance claims.
It argued that there are a number of diseases that affect large sections of the population—including various cardiovascular conditions, high blood pressure and diabetes in all forms—that can be classified as genetic disorders. Since the term is capable of so many different interpretations, using it as an exclusion to the applicability of an insurance policy, falls foul of Article 14 of the Constitution. In the absence of appropriate genetic testing, and without laying down intelligible differentia for the application of this term, discrimination against individuals based solely on their genetic heritage is unconstitutional.
The court also made it clear that this issue must not be viewed as being just a contractual issue between the insurance company and the insured, but has to be addressed in the broader context of the right to health. A person suffering from a genetic disorder needs medical insurance as much as anyone else.
Following this judgement, insurance companies will have to remove from their policies, all reference to exclusions based on genetic disorders. They will no longer be allowed to avoid paying out insurance simply because a particular disease has genetic origins.
This is a welcome ruling as the specific exclusion of genetic disorders by the IRDA runs contrary to the way other countries have approached the issue. The trend around the world has been to actively prevent discrimination based on genetic information, with various countries enacting specific laws against it.
As discussed in an earlier article, most rare diseases are of genetic origin and their treatment often requires expensive procedures. Rather than design the system to exclude these illnesses from the benefits of insurance, we’d do well to account for them in our actuarial analysis.
The first step in this direction is to ensure that merely because they arise as a consequence of genetic conditions, that will not, of itself, render these illnesses uninsurable. Now that the Delhi high court has struck down these provisions, I am hopeful that the government will take steps to improve the access that patients suffering from rare diseases will have to insurance.
Rahul Matthan is a partner at Trilegal. Ex Machina is a column on technology, law and everything in between. His Twitter handle is @matthan.
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