We compare the alternative approaches for regulating genetic information
in the health insurance market when prevention measures are available.
In the model, firms offer insurance contracts to consumers who are
initially uninformed of their risk type but can obtain such information
by performing a costless genetic test. A crucial ingredient of our analysis
is that information has decision-making value since it allows for optimal
choice of a self-insurance action (secondary prevention). We focus on the
welfare properties of market equilibria obtained under the different regulatory
schemes and, by using an intuitive graphical analysis, we rank them
unambiguously.
Our results show that Disclosure Duty weakly dominates the other
regulatory schemes and that Strict Prohibition represents the worst regulatory
approach
