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Business & Professional Ethics 7th Edition by Leonard Brooks,Paul Dunn
Edition 7ISBN: 978-1285182223Business & Professional Ethics 7th Edition by Leonard Brooks,Paul Dunn
Edition 7ISBN: 978-1285182223 Exercise 16
Adverse selection occurs when one party has an information advantage over the other party. In the case of insurance, people taking out insurance know more about their health and lifestyle than the insurance company. Therefore, in order to reduce information asymmetry, the insurance company asks prospective customers to complete a medical questionnaire and/ or submit to a medical examination. Knowing the health risks associated with the people taking out insurance allows the insurance company to better adjust the premiums that it charges. For example, the premium for smokers is higher than for non-smokers.
Some people are subject to genetically inherited health problems, such as Alzheimer's, ALS, and Huntington's disease. Huntington's, for example, is an incurable degenerative brain disorder that affects about one in ten thousand people. Children of a parent who has Huntington's have a fifty percent chance of inheriting the disease. Legislation in Belgium, Denmark, Finland, France, Norway, and Sweden make it illegal to discriminate against people who may have inherited diseases. Similar legislation was enacted in the United States. The Genetic Information Nondiscrimination Act, signed by President Bush in May 2008, prohibits employment and insurance discrimination simply on the basis that a person has a genetic predisposition to developing a disease in the future.
There is no such legislation in Canada. But, in February 2010, Member of Parliament Judy Wasylycia-Leis announced that she would be tabling a private members bill against genetic discrimination. She is opposed to genetic discrimination for three reasons. "One is that people who carry genes that code for particular diseases may or may not eventually develop them. The second is that some people may not want to be forced to take a test because they don't want to know what their eventual fate in life may be. Finally, the third is that people who do want to take a test for health reasons may not do so because they fear having the results used against them."
Do you consider it to be unethical for insurance companies to charge high risk people a higher premium than low-risk people?
Some people are subject to genetically inherited health problems, such as Alzheimer's, ALS, and Huntington's disease. Huntington's, for example, is an incurable degenerative brain disorder that affects about one in ten thousand people. Children of a parent who has Huntington's have a fifty percent chance of inheriting the disease. Legislation in Belgium, Denmark, Finland, France, Norway, and Sweden make it illegal to discriminate against people who may have inherited diseases. Similar legislation was enacted in the United States. The Genetic Information Nondiscrimination Act, signed by President Bush in May 2008, prohibits employment and insurance discrimination simply on the basis that a person has a genetic predisposition to developing a disease in the future.
There is no such legislation in Canada. But, in February 2010, Member of Parliament Judy Wasylycia-Leis announced that she would be tabling a private members bill against genetic discrimination. She is opposed to genetic discrimination for three reasons. "One is that people who carry genes that code for particular diseases may or may not eventually develop them. The second is that some people may not want to be forced to take a test because they don't want to know what their eventual fate in life may be. Finally, the third is that people who do want to take a test for health reasons may not do so because they fear having the results used against them."
Do you consider it to be unethical for insurance companies to charge high risk people a higher premium than low-risk people?
Explanation
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In the current U.S. health insurance mar...
Business & Professional Ethics 7th Edition by Leonard Brooks,Paul Dunn
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