Sick shut out of health care dream

FROM 13 April, an Incapacity Benefit replaces the old Invalidity Benefit, with stricter guidelines that will take up to 500,000 people off this allowance in the next three years. If claimants are fit enough to walk up the stairs, they may not qualify in future. New claimants will also be taxed.

In the short run, the changes are designed to reverse the recent steep rise in the cost of claims. In the long term, the Government aims to encourage private insurance to take over public provision for health care, unemployment and continuing care for the elderly. But this whole philosophy could be sorely tested by medical advances and the increasing selectivity of the insurance industry.

In a few years it may be possible to predict Alzheimer's disease in young adults. At present, there are 450,000 people suffering from the disease, a figure expected to rise to 750,000 within 15 years. Harry Cayton, the executive director of the Alzheimer's Disease Society, said: "Genetic tests of risk will in fact render private insurance schemes ineffective as a way of caring for the whole population."

Testing for genetic susceptibility to breast and bowel cancer, diabetes and heart disease could also become commonplace. Early detection will have significant benefits, especially where preventative treatment can be undertaken. Difficulties will arise when people who prove to have a genetic disorder which could cause illness in later life try to buy insurance.

More than a million people could be denied life assurance, term assurance, or long-term care insurance, or have their premiums raised to impossibly high levels, as a result of improved genetic testing. Medical insurance will also be affected.

At present, insurers insist that medical conditions known to the individual be disclosed on application. They increase premiums to prohibitive levels or refuse cover outright if the risk is perceived to be high.

The Government's planned changes to benefits are already opening up more gaps which individuals cannot realistically hope to fill by taking out commercial insurance. Mrs Davis - not her real name - has a fluctuating genetic condition that sometimes obliges her to stop working for a period of months. Worried about new legislation which will reduce government mortgage payments for people who lose their jobs, she wanted mortgage redundancy cover.

The new rules will reduce current borrowers' entitlement to nothing for the first two months, half payment for the next four, and full government mortgage payments only after six months. New borrowers will receive no government help for nine months.

Mortgage redundancy insurance, to plug the gap in cover after October, will normally be around 7 per cent. When Mrs Davis approached the insurance companies, however, some refused outright. The best deal she was offered was a premium that was 50 per cent of her monthly mortgage repayment.

In future, if genetic testing becomes widespread as a way of improving the health of the nation, insurers will require the information and adjust premiums accordingly. This would make cover impracticable for many.

"The life insurers have to take a view of risk, as a competitive business. If we know people could die sooner than they otherwise might, it would be unfair on the other policy-holders to provide cover at the same price. We do not have a social fund where everyone makes the same contributions, as in Germany,'' said Vic Rance, spokesman for the Association of British Insurers. A further shock could be in store for consumers if domestic insurance companies follow the lead of some of their US counterparts and introduce compulsory genetic testing before issuing policies.

Mr Rance said that there were no immediate plans for this, partly because of the expense. But the ABI would not rule out such a move in the future if the tests become cheaper. Some companies already impose Aids tests on certain individuals who seek an unusually high level of life insurance. Term assurers such as Swiss Life, Sun Alliance and Providence Capitol have recently started loading their premiums according to lifestyles.

As a condition of lower rates, preferred life term assurance requires the candidate to have a healthy family history, to have normal blood pressure, and not to have smoked any tobacco for at least two years. This follows the trend in the US, where 50 per cent of term cover is now issued on a preferred life basis.