GENETIC NON-DISCRIMINATION: 

IMPLICATIONS FOR EMPLOYER 

PROVIDED HEALTH CARE PLANS 

HEARING

BEFORE THE 

SUBCOMMITTEE ON EMPLOYER-EMPLOYEE RELATIONS 

OF THE 

COMMITTEE ON EDUCATION AND 

THE WORKFORCE 

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS 

FIRST SESSION

HEARING HELD IN WASHINGTON, DC, SEPTEMBER 6, 2001 

Serial No. 107-29 

Printed for the use of the Committee on Education 

and the Workforce

U.S. GOVERNMENT PRINTING OFFICE 

 77-675 pdf WASHINGTON : 2002

For sale by the Superintendent of Documents, U.S. Government Printing Office 

Internet: bookstore.gpo.gov Phone: (202) 512-1800 FAX: (202) 512-2250 

Mail: Stop SSOP, Washington, DC 20402-0001
ii

COMMITTEE ON EDUCATION AND THE WORKFORCE 

JOHN A. BOEHNER, Ohio, Chairman 

THOMAS E. PETRI, Wisconsin GEORGE MILLER, California 

MARGE ROUKEMA, New Jersey DALE E. KILDEE, Michigan 

CASS BALLENGER, North Carolina MAJOR R. OWENS, New York 

PETER HOEKSTRA, Michigan DONALD M. PAYNE, New Jersey 

HOWARD P. “BUCK” McKEON, California PATSY MINK, Hawaii 

MICHAEL N. CASTLE, Delaware ROBERT E. ANDREWS, New Jersey 

SAM JOHNSON, Texas TIM ROEMER, Indiana 

JAMES C. GREENWOOD, Pennsylvania ROBERT C. “BOBBY” SCOTT, Virginia 

LINDSEY O. GRAHAM, South Carolina LYNN C. WOOLSEY, California 

MARK E. SOUDER, Indiana LYNN N. RIVERS, Michigan 

CHARLIE W. NORWOOD, JR., Georgia RUBEN HINOJOSA, Texas 

BOB SCHAFFER, Colorado CAROLYN McCARTHY, New York 

FRED UPTON, Michigan JOHN F. TIERNEY, Massachusetts 

VAN HILLEARY, Tennessee RON KIND, Wisconsin 

VERNON J. EHLERS, Michigan LORETTA SANCHEZ, California 

THOMAS G. TANCREDO, Colorado HAROLD E. FORD, JR., Tennessee 

ERNIE FLETCHER, Kentucky DENNIS KUCINICH, Ohio 

JIM DeMINT, South Carolina DAVID WU, Oregon 

JOHNNY ISAKSON, Georgia RUSH D. HOLT, New Jersey 

BOB GOODLATTE, Virginia HILDA L. SOLIS, California 

JUDY BIGGERT, Illinois SUSAN DAVIS, California 

TODD RUSSELL PLATTS, Pennsylvania BETTY McCOLLUM, Minnesota 

 PATRICK J. TIBERI, Ohio 

 RIC KELLER, Florida 

 TOM OSBORNE, Nebraska 

 JOHN ABNEY CULBERSON, Texas 

 Paula Nowakowski, Chief of Staff 

John Lawrence, Minority Staff Director

SUBCOMMITTEE ON EMPLOYER-EMPLOYEE RELATIONS 

SAM JOHNSON, Texas, Chairman

ERNIE FLETCHER, Kentucky, Vice Chairman ROBERT E. ANDREWS, New Jersey

JOHN BOEHNER, Ohio DONALD M. PAYNE, New Jersey 

MARGE ROUKEMA, New Jersey DALE E. KILDEE, Michigan 

CASS BALLENGER, North Carolina LYNN N. RIVERS, Michigan 

PETER HOEKSTRA, Michigan CAROLYN McCARTHY, New York 

HOWARD P. “BUCK” McKEON, California JOHN F. TIERNEY, Massachusetts 

THOMAS G. TANCREDO, Colorado HAROLD E. FORD, Jr., Tennessee 

JIM DeMINT, South Carolina 

PATRICK J. TIBERI, Ohio 
iii

Table of Contents 

OPENING STATEMENT OF CHAIRMAN SAM JOHNSON, SUBCOMMITTEE 

ON EMPLOYER EMPLOYEE RELATIONS, COMMITTEE ON EDUCATION 

AND THE WORKFORCE............................................................................................. 2

OPENING STATEMENT OF RANKING MEMBER ROBERT ANDREWS, 

SUBCOMMITTEE ON EMPLOYER EMPLOYEE RELATIONS, COMMITTEE ON 

EDUCATION AND THE WORKPLACE..................................................................... 3

STATEMENT OF JANET TRAUTWEIN, DIRECTOR OF FEDERAL POLICY 

ANALYSIS AND STATE GOVERNMENT AFFAIRS, NATIONAL ASSOCIATION 

OF HEALTH UNDERWRITERS, ATLINGTON, VA ................................................. 4

STATEMENT OF JANE MASSEY LICATA, ATTORNEY, LICATA & TYRRELL 

P.C., MARLTON, NJ ..................................................................................................... 7

STATEMENT OF MARY K. WILLIAMS, ATTORNEY, ALSTON & BIRD, 

ATLANTA, GA.............................................................................................................. 9

APPENDIX A - WRITTEN OPENING STATEMENT OF CHAIRMAN SAM 

JOHNSON, SUBCOMMITEE ON EMPLOYER EMPLOYEE RELATIONS, 

COMMITTEE ON EDUCATION AND THE WORKFORCE ................................... 25

APPENDIX B - WRITTEN TESTIMONY OF JANET TRAUTWEIN, DIRECTOR 

OF FEDERAL POLICY ANALYSIS AND STATE GOVERNMENT AFFAIRS, 

NATIONAL ASSOCIATION OF HEALTH UNDERWRITERS, ARLINGTON, VA

....................................................................................................................................... 29

APPENDIX C - WRITTEN STATEMENT OF JANE MASSEY LICATA, 

ATTORNEY, LICATA & TYRRELL P.C., MARLTON, NJ ..................................... 67

APPENDIX D - STATEMENT OF MARY K. WILLIAMS, ATTORNEY, ALSTON 

& BIRD, ATLANTA, GA ............................................................................................ 77

APPENDIX E - SUBMITTED FOR THE RECORD, ADDITIONAL ANSWERS TO 

QUESTIONS POSED DURING QUESTION AND ANSWER PERIOD, JANE 

MASSEY LICATA, J.D., Ph.D., SEPTEMBER 6, 2001............................................. 87

Table of Indexes............................................................................................................ 90
1

GENETIC NON-DISCRIMINATION: 

IMPLICATIONS FOR EMPLOYER PROVIDED HEALTH CARE PLANS 

____________________

Thursday, September 6, 2001 

Subcommittee on Employer Employee Relations 

Committee on Education and the Workforce 

U.S. House of Representatives 

Washington, D.C. 

 The Subcommittee met, pursuant to call, at 2:01 p.m., in Room 2175, Rayburn 

House Office Building, Hon. Sam Johnson, Chairman of the Subcommittee, presiding. 

 Present: Representatives Johnson, Boehner, Fletcher, Andrews, Payne, Rivers, 

McCarthy, and Tierney. 

 Staff Present: Kristin Fitzgerald, Professional Staff Member; David Connolly, 

Professional Staff Member; David Thomas, Legislative Assistant; Jo-Marie St. Martin, 

General Counsel; Patrick Lyden, Professional Staff Member; Scott Galupo, 

Communications Specialist; Deborah Samantar, Committee Clerk/Intern Coordinator; 

Cheryl Johnson, Minority Counsel; Michele Varnhagen, Minority Labor 

Counsel/Coordinator; Peter Rutledge, Senior Legislative Associate/Labor; and Brian 

Compagnone, Minority Staff Assistant/Labor. 

Chairman Johnson. Good afternoon. A quorum being present, the Subcommittee on 

Employer-Employee relations will come to order. We are meeting today to hear 

testimony on genetic non-discrimination and how its implications for employer-provided 
2

health care plans affect us. We have been dealing with this issue for a long time and we 

are now getting serious about it. So it is time for us to have more hearings, and this is the 

second in a series.

 I am going to limit the opening statements to the Ranking Minority Member and 

myself. Therefore, other Members statements may be included in the record. With that, I 

ask unanimous consent for the hearing record to remain open 14 days to allow Members' 

statements and other extraneous material mentioned during the hearing to be submitted. 

Without objection, so ordered. 

OPENING STATEMENT OF CHAIRMAN SAM JOHNSON, 

SUBCOMMITTEE ON EMPLOYER EMPLOYEE RELATIONS, 

COMMITTEE ON EDUCATION AND THE WORKFORCE

 Good afternoon. Let me extend a warm welcome to all of to you, and to the 

Ranking Member, Mr. Andrews. Today's hearing, as I said, focuses on genetic nondiscrimination and what it means for employer-sponsored health care plans. This is our 

second hearing in a series designed to shed light on the topic of genetic nondiscrimination. 

 As I said at the first hearing, the Members of this Committee are strongly opposed 

to genetic discrimination. And we believe that access to employer-sponsored health care 

should be available to employees, regardless of health factors, genetic or otherwise.

Several existing Federal laws already protect the privacy and use of genetic information 

and guard against discrimination based on genetic factors. In addition, more than half of 

the States have enacted laws that further restrict the privacy and use of genetic 

information by employers and the health insurance industry as a whole. This 

Subcommittee has jurisdiction over both the employer provided health insurance and 

employment aspects of the genetic non-discrimination issue. 

 In our first hearing, the Subcommittee looked at current employment law and 

practice, and State laws and implications for employers and employees of potential 

legislation to prevent employment discrimination. Today we are going to look at the 

employer-provided health care portion of genetic non-discrimination. 

 We hope to answer many questions on this issue including, one, does the Health 

Insurance Portability and Accountability Act, HIPAA, already protect employees from 

discrimination; two, do the HIPAA privacy regulations already restrict the use of genetic 

information; three, how additional requirements and penalties would work in conjunction 

with these regulations; four, what are the unintended consequences of overly broad 

definitions of genetic information and testing; five, how have States addressed this issue 

through legislation; six, what enforcement measures and penalties are most applicable to 

this situation? 

 Following this investigation of genetic non-discrimination, we expect to conduct 

another hearing to examine the bills that have been introduced in the Congress. Even I 

look forward to working with my colleagues on the Subcommittee as we move forward, 
3

including Mr. Andrews, who has already agreed that we need to work on this issue. 

 So I now yield to the distinguished Ranking Minority Member of the 

Subcommittee, Mr. Andrews, for whatever opening statement he would like to make. 

WRITTEN OPENING STATEMENT OF CHAIRMAN SAM JOHNSON, 

SUBCOMMITEE ON EMPLOYER EMPLOYEE RELATIONS, COMMITTEE ON 

EDUCATION AND THE WORKFORCE – SEE APPENDIX A 

OPENING STATEMENT OF RANKING MEMBER ROBERT 

ANDREWS, SUBCOMMITTEE ON EMPLOYER EMPLOYEE 

RELATIONS, COMMITTEE ON EDUCATION AND THE 

WORKPLACE

Thank you, Mr. Chairman. It is good to be back with you and Members of our 

Committee, our staff and our guests today. I think there are two major principles on 

which there is agreement, and our job is to move from those principles to the specifics of 

what the law ought to be. 

 The first principle is privacy. Perhaps no item is more private and more sensitive 

and personal than one's health care records, in particular, one's genetic records. This 

really is the key that can unlock all sorts of information about one's life, one's health, and 

therefore it deserves the highest degree of protection the law can afford. 

 The second principle is non-discrimination. I don't think that anyone should be 

denied a job, a promotion, an educational opportunity or any other thing of value because 

of his or her genetic predisposition toward any particular condition. The fact that 

someone may have a gene map that would incline him or her toward alcoholism or drug 

abuse should never be, in my judgment, a valid basis for denying that person a job or an 

opportunity. Actual behavior should govern decisions about employment and economic 

opportunities, not predisposition toward behavior. 

 We are about to be handed an enormously powerful predictive tool. That 

predictive tool will be the gene map of us and our families and our neighbors. This tool 

has incredible positive potential. It can lead to the control or elimination of all sorts of 

diseases and conditions that have led to much human suffering. And for this we should 

be jubilant. But this powerful predictive tool has some other issues attached to it. 

 It is rather a mixed blessing. The part of the blessing that is mixed is the potential 

for abuse of one's privacy rights and private information and the potential for abuse of 

information about one's medical predisposition for decisions that would bar or impede 

someone's access as far as his or her abilities would take them. These principles do not 

easily translate themselves into the statute books. The issues that we will explore this 

afternoon, I believe, have no simple answer nor do they have a partisan tint. Chairman 

Johnson has approached this issue with fairness and openness. I know that it is his intent
4

to make sure that the law reflects the principles that I have just outlined. And we look 

forward to hearing from our panel of expert witnesses today, their ideas and views and 

suggestions as to how we may make those principles the law of the land. 

 With that, I would yield back and ask the chairman to begin the witness 

statements. 

Chairman Johnson. Thank you, Mr. Andrews. You know, what Mr. Andrews said that 

is very important is that this is a very complicated issue, and covers the spectrum of 

health and law and employer and employee relations. That is why this Committee has an 

interest in it. We hope we can solve some of those problems. It is now my pleasure to 

welcome and introduce our panel of witnesses.

Let me introduce them all, and then they will give their testimony. Our first 

witness on the panel is Ms. Janet Trautwein. She is director of Federal Policy Analysis 

and State Government Affairs for the National Association of Health Underwriters. Our 

second witness is Ms. Jane Massey Licata. She is the senior partner of the law firm of 

Licata & Tyrrell. Ms. Licata is also a Professor at the Rutgers School of Law in Camden, 

New Jersey, and has a strong background in biology and chemistry. Our final witness 

today is Ms. Mary Williams. She is an attorney at the law firm of Alston & Bird, Atlanta, 

Georgia. Ms. Williams has focused most of her career on matters concerning employee 

health and benefit plans. 

 I thank all three of you for being here today, and let me remind witnesses that 

under our Committee rules, you should limit your oral statements to 5 minutes. However, 

 the entire written statement will appear in the record. There is a light up there in front of 

you that is red, yellow and green. The green gives you 4 minutes, the yellow gives you 1 

minute and when the red one comes on, we would appreciate it if you would wind up 

your testimony. 

 I thank you so much, all of you, for being here. Let me just tell you that in about 

an hour, I think we are going to have another vote, which will be the last on the floor 

today. So we would like to get as much in before that time if we can. And we will either 

finish afterward or close then. 

Ms. Trautwein, would you begin with your testimony. 

STATEMENT OF JANET TRAUTWEIN, DIRECTOR OF FEDERAL 

POLICY ANALYSIS AND STATE GOVERNMENT AFFAIRS, 

NATIONAL ASSOCIATION OF HEALTH UNDERWRITERS, 

ATLINGTON, VA 

Thank you. My name is Janet Trautwein. I am Director of Federal Policy for the 

National Association of Health Underwriters. NAHU is an 18,000-member association 
5

of insurance professionals involved in the sale and service of health insurance and related 

products. We appreciate very much this opportunity to present information on the health 

insurance underwriting process as it impacts employers and the effect well-intended 

genetic discrimination legislation could have on the cost of health insurance. 

 NAHU believes that health insurance affordability is the most important 

component of access to health care. To start out, it may be helpful to explain just what 

underwriting is. Underwriting is a basic evaluation of risk. Applicants for all types of 

insurance go through a risk evaluation process or underwriting, as do applicants for credit 

cards, bank loans and mortgages. 

 Since the business of insurance is regulated primarily at the State level, fully 

insured employer health insurance plans are subject to State rules regarding underwriting 

and rates. All 50 States have regulations on health insurance underwriting and portability 

provisions. Most have patient protection laws, and many have already passed laws on 

genetic discrimination in insurance underwriting employment, or both. 

 In addition to State law and underwriting, Federal legislation HIPAA prohibits 

discrimination against individual members of a group health plan on the basis of current 

health status or on the basis of some future predisposition to a particular disease based on 

genetic information. When an employer of any size obtains health coverage, the 

employer normally requests bids from several different insurance carriers, usually with 

the assistance of an insurance broker, to determine which plan is willing to offer the best 

benefits for the money. 

 The process of obtaining bids for coverage is somewhat different for different size 

groups. For mid-size groups of 50 to 300 employees, employers that have a current 

health plan are required to provide 3 years of claims experience. Claims experience is a 

list of paid premiums versus paid claims. The claims experience will typically also 

include a list of large claims by amount and diagnosis, not with an individual's name. 

The bidding carrier will also ask about any known serious illnesses and their prognosis to 

the best of the employer's knowledge. The underwriter for the insurance carrier evaluates 

the information provided and issues a proposal with the benefits and rates the carrier is 

willing to offer the employer. 

 The process for larger groups over 300 employees works in a manner similar to 

that described for the medium-size groups, except that less information on large claims 

and serious illnesses is required. Plans may be fully insured still at this size, but much 

more likely to be partially or fully self-insured. 

 In a self-insured plan, the employer often buys stop-loss coverage to protect 

against excessive losses. In order for an employer to know how much stop-loss coverage 

is appropriate for their group, the same information asked of fully-insured cases relating 

to claims experience, large claims and serious illnesses is required. If stop-loss levels are 

set too high, the employer may have inadequate protection in event of a year of high 

claims. So this information is extremely important. 

 Next in size are small employer groups of 2 to 50. HIPAA and State law provide 

that small employer health insurance coverage must be issued regardless of the health
6

status of employees and dependents, although many States allow rates to vary for the 

group based on overall health status. 

 In States where underwriting based on health status is allowed, each employer is 

required to complete an individual questionnaire with detailed health information on the 

employee and all family members to be covered. Each employee application is 

considered individually, usually using a point system. And the overall points determine 

whether the group will be issued at the rates quoted or with a rate-up. We have attached 

a chart showing the rating laws in each State to our written testimony along with a small 

sample employer health questionnaire, if you would like to look at the actual questions 

that are asked. 

 It is important to briefly mention rate stability. It is critical that a plan's initial 

rates be as accurate as possible. Rates that are set too low initially can result in very large 

premium increase at renewal. These large fluctuations are very unsettling for employers 

and employees and can result in some employees dropping coverage when they can't pay 

their share of premiums. 

 How does pending genetic discrimination legislation impact this process? 

Legislation to expand the HIPAA prohibition on the use of genetic information in 

underwriting, such as H.R. 602, has broadened the definition of genetic information in a 

way that could include items that go beyond what is normally considered to be a genetic 

test. Using too broad a definition could disrupt normal underwriting procedures resulting 

in unaffordable health insurance premiums for employers and consumers. 

 In conclusion, health insurance underwriting is a complicated process. It is a 

combination of art and science and it is highly dependent on not only the risk of the 

applicants, but also other market conditions that may be beyond the applicant's control. 

The most important component is complete information to allow for a thorough 

evaluation of risk. It is critical that as lawmakers consider genetic discrimination 

legislation, they carefully craft the definition so as not to impede the normal underwriting 

process. I appreciate this opportunity to come today and welcome any questions you may 

have.

WRITTEN TESTIMONY OF JANET TRAUTWEIN, DIRECTOR OF FEDERAL 

POLICY NALYSIS AND STATE GOVERNMENT AFFAIRS, NATIONAL 

ASSOCIATION OF HEALTH UNDERWRITERS, ARLINGTON, VA – SEE 

APPENDIX B 

Chairman Johnson. Thank you so much. We will reserve our questions until we listen 

to all three of you. But thank you again for your testimony. 

Ms. Licata you may begin yours now. 
7

STATEMENT OF JANE MASSEY LICATA, ATTORNEY, LICATA & 

TYRRELL P.C., MARLTON, NJ 

Good afternoon. My name is Jane Massey Licata, and I am a biotechnology 

patent and FDA lawyer and professor of patent law at Rutgers School of Law, Camden, 

NJ. In my practice, I represent universities, biotechnology companies and major 

pharmaceutical companies. I have filed and prosecuted thousands of patent applications 

concerning diagnostics and therapeutics, which rely upon genetic information and human 

genes. As I have watched the technology and the law develop, I have come to appreciate 

the power of this technology and also the responsibilities and risks created by it. 

 With the completion of the first map of the human genome, we now have a basis 

for determining our unique genetic makeup and probable medical future to permit 

personal diagnostics and therapeutics to be created for us. This is no longer the stuff of 

science fiction. Every day, new genetic markers are identified and correlated with human 

biology and disease. 

 The future of medicine lies in Genomics. Worldwide university and 

pharmaceutical company researchers alike are mining databases of genetic information 

and rapidly identifying new drug targets, diagnostic markers and creating a basis for 

novel therapies. Tests designed to determine the presence or versions of genes that cause 

diseases or conditions carry with them the most intimate details of a biological past and 

future as well as a devastating potential for discrimination. 

 Analysis of our genetic material also provides information about our parents, 

siblings and children which impacts not only on us, but also on family privacy. The 

potential for misunderstanding or misuse of this information is so great that it is essential 

that we establish a national policy for the protection of an individual's privacy interest in 

their genetic information. H.R. 602 is an important and timely legislative initiative to 

prohibit health insurance and employment discrimination against individuals and their 

family members on the basis of predictive genetic information or genetic services. 

 Overall, this bill is a well-drafted, well-considered proposal. There are a number 

of points that may bear further consideration, however. The term "predictive," in the 

definition of genetic information, may have been intended to address the concern that 

many genetic markers are not conclusively diagnostic, but rather may indicate a 

predisposition to a disease or condition, or may presently be believed to have a 

correlation with a disease or condition. In such cases, it would be especially troublesome 

if the information were relied upon to make employment or insurance decisions. 

 There is also an exception concerning sharing of information between health care 

providers for treatment. Health care providers, however, are accustomed to dealing with 

sensitive, confidential information, such as HIV status and accordingly, a blanket 

exception is not required. The individual's prior written consent to make the information 

available between health care providers should not be an undue burden and helps to 

identify the information that is sensitive and confidential. 
8

Further, there is an exception for information for payment of a claim. This 

provision places individuals in the position of paying for the genetic tests themselves or 

risking disclosure. Under the proposed scheme, the insured employer who may not have 

reasonable access to legal representation may not be able to effectively protect their 

privacy interest. 

 I would, therefore, suggest that the government take a more proactive role and 

that there be substantial penalties provided for in event of a violation or disclosure.

While some States, like my State, New Jersey, have enacted genetic Privacy Acts, I 

believe it is essential to establish a consistent national policy to protect against genetic 

discrimination this employment and insurance, and to protect the privacy of this most 

sensitive and personal information. These issues cross State boundaries and affect all of 

our citizens. 

 New Jersey's Genetic Privacy Act, which was enacted in 1996 declared the 

genetic information, is personal information that should not be collected, retained or 

disclosed without the individual's authorization. The Act prohibits discrimination by 

employers against employees carrying genetic markers of diseases or behavioral traits. It 

is unlawful for an employer to refuse to hire or employ, or to discharge or require to retire 

an employee because of the employee's genetic information, or because the employee 

refused to submit to a genetic test or make available the results of a genetic test to the 

employer. 

 It also prohibits the use of genetic information in the fixing of rates or 

withholding life insurance or health insurance. The penalties for violations include fines 

and prison terms, and also actual damages for economic bodily or emotional harm 

approximately caused by the disclosure. I believe H.R. 602 would be a good beginning 

in addressing a national issue. 

 While an Act like the New Jersey Act is an important first step in controlling the 

flow of genetic information, Federal legislation is still needed. H.R. 602 addresses some 

of the most urgent needs in protecting an individual's privacy and assuring access to 

genetic testing and services. Until recently, access to this type of testing was limited to 

those who could afford to pay for it privately. By paying for it themselves, they could 

also have greater assurance of confidentiality concerning the testing and the results.

While wider acceptance of the need and validity of genetic testing has made insurers 

more comfortable with reimbursement, there is a huge risk to the insured or employee 

that very sensitive information, which could easily be subject to misinterpretation, may 

be widely distributed as a part of the insurance information system. 

 I would suggest erring on the side of making such information as inaccessible as 

possible to third parties since the risk of misunderstanding or misuse is so great. 

 Thank you. 

WRITTEN STATEMENT OF JANE MASSEY LICATA, ATTORNEY, LICATA & 

TYRRELL P.C., MARLTON, NJ – SEE APPENDIX C 
9

Chairman Johnson. Thank you ma'am.

 Ms. Williams, you may begin your testimony. 

STATEMENT OF MARY K. WILLIAMS, ATTORNEY, ALSTON & 

BIRD, ATLANTA, GA 

 My name is Mary Williams. I practice law in the Atlanta, Georgia office of 

Alston & Bird. Primarily, I represent employers who sponsor self-funded plans for their 

employees and the third party administrators who provide services to those plans. 

 A self-funded plan is one where the employer assumes the financial risk of 

providing benefits to their employee. Rather than purchasing medical insurance from a 

carrier, they absorb the financial burden of providing benefits to their employees. 

 Today, I wish to make four points about genetic non-discrimination and how it is 

applicable to benefits provided by employers. But first, let me emphasize that employers 

are strongly opposed to genetic discrimination. However, it is not necessary to enact 

additional legislation to protect that information in the group health plan setting because 

current laws already do so. 

 First, current Federal law already protects group health plans from genetic 

discrimination. HIPAA currently prohibits a group health plan from discriminating with 

regard to enrollment, eligibility, premium, deductibles and co-payments. For example, 

under current law, an employer may not exclude an otherwise eligible employee from 

coverage based on any medical information including genetic information. An employer 

may not impose benefit restrictions upon any employee based on their medical 

information. And an employer may not increase deductibles, co-payments or 

contributions for an individual just based on their medical information. 

 Second, HIPAA protects collection, use and disclosure of health information 

including genetic information. HIPAA's privacy rules strictly limit the use and disclosure 

of medical information, including genetic information obtained by a group health plan 

and prohibits employers from using that information for any employment-related action. 

 The privacy regulations also impose substantial administrative burdens upon 

employers and health plans to control access to and to provide physical security for the 

health information that they obtain. To ensure that, the employer does not share the 

information with any one except those needing that information for purposes of 

administrating the health plan. 

 Third, employer-sponsored health plans are not using employee’s genetic 

information in a discriminatory manner. Employers agree that their employees' medical 

information collected through the group health plan setting should be protected and 

should be used only as absolutely necessary to effectively administer their group health 
10

plan. Employer-sponsored group health plans as a whole are not participating in the factfinding activities that are the concern of the genetic community. For example, group 

health plans are not requiring that their participants fill out questionnaires, or participate 

in physical examinations, and they are not asking for the results of any test results.

Rather, self-funded group health plans use medical information for paying claims and for 

other vital administrative functions necessary to operate their plans. 

 For example, a group health plan does obtain stop-loss insurance, as Ms. 

Trautwein has said. And in order to do that, they must disclose specific information 

about claims incurred over the past year. Without that stop-loss insurance, self-funded 

health plans cannot exist. 

 Fourth, if Congress moves forward with further regulation, care must be given to 

avoid unintended consequences of overly broad language. Any additional legislation in 

the medical information area must be drafted very carefully to avoid unintended 

consequences that could negatively impact the day-to-day administrative needs of an 

employer-sponsored health plan. As I have mentioned, I think this is virtually impossible 

to do. Legislation that is drafted without a complete comprehension of the operations of 

a group health plan inevitably will create burdensome requirements that will frustrate the 

ability to offer any group health coverage. 

 Under current Federal law, current health plans are prohibited from discriminating 

against enrollment, eligibility, contributions or premium rates based on any genetic 

information an employer receives. Under current Federal law, group health plans are 

prohibited from using and disclosing any genetic information concerning a plan 

participant without that participant's authorization. 

 Under current Federal law, employers are prohibited from using or disclosing 

health information or genetic information for employment-related purposes. This is the 

law today. No additional regulation in this area of employee benefit law is needed to 

accomplish the objective of genetic non-discrimination. Thank you. 

STATEMENT OF MARY K. WILLIAMS, ATTORNEY, ALSTON & BIRD, 

ATLANTA, GA – SEE APPENDIX D 

Chairman Johnson. Thank you, ma'am. I thank all the witnesses for their testimony. 

We appreciate it.

We are tying to establish an understanding of what the current law is, and 

determine if there are any deficiencies in it that we need to correct. I would like to pursue 

what you just said if you don't mind. Is there any difference between a group plan and a 

company that self-insures by themselves? 

Ms. Williams. There are two types of plans that a group can offer in general. One is a 

self-funded plan, where the employer absorbs the primary burden of providing coverage 

to the employee. The other is for the employer to go out and purchase a fully insured 

product just as you would do if you were going to purchase. 
11

Chairman Johnson. But does HIPAA protect them under both those situations? 

Ms. Williams. HIPAA protects all types of group insurance or group health coverage. 

Chairman Johnson. I wonder if you could address the concept of firewalls contained in 

the HIPAA regulation, and how this practice further protects the privacy of employees? 

Ms. Williams. Yes, sir. When people hear HIPAA now, they are thinking of just the 

HIPAA privacy regulations because that is just the most recent regular legislation we 

have received. HIPAA has been around for a long time. 

Chairman Johnson. But as I understand, it is not fully implemented. 

Ms. Williams. The first part of HIPAA is. The non-discrimination rules are fully 

implemented. They have been around since 1996. And since 1996, you could not 

discriminate against someone based on his or her health factors.

The new portion of HIPAA is the privacy rules that govern the use and disclosure 

and collection of medical information. You are correct they will not be implemented 

until April 14th 2003. But those regulations require that employers put firewalls in place 

to separate all of the employer activities from the activities of their health plan. So it may 

mean that just one or two individuals have access to the health information of the 

employees. There needs to be physical fire walls that actually separate these people by 

office, put medical records under lock and key, and implement new password systems for 

computers. 

 So HIPAA does require it. The people, who do not need the health 

information in order to administer the plan and pay the claims, do not have access 

to the information. 

Chairman Johnson. But none of that information can get into the employment process. 

Ms. Williams. That is exactly right. None of that information that is learned because of 

the participation in the health plan can be used for any other employment-related activity. 

Chairman Johnson. Do you see any weaknesses in HIPAA that need to be corrected? 

Ms. Williams. I do not want my statements to be a clear endorsement of HIPAA because 

the HIPAA privacy rules do have a lot of problems. In fact, other members of my firm 

have testified at several Committees about some of the problems that the HIPAA privacy 

rules face. But as far as the disclosure and use and collection of health information by an 

employer and by the employer's health plan, there is really nothing more you can do and 

still allow that health plan to administer claims the way it is supposed to. 

 Through the 2-year comment period, HIPAA started out with just the payment of 

claims and that is it. Through the over 76,000 comments that HHS has received, they 

have learned that employers need this information in other legitimate non-discriminatory 

ways in order to do other things that a health plan must do. 
12

Chairman Johnson. Thank you so much. 

Mr. Andrews. 

Mr. Andrews. Thank you. 

I would like to thank the panelists for the excellent testimony. I especially want 

to say to Ms. Massey Licata, that I appreciate her contribution to this discipline and her 

friendship over the years, and I appreciate her making the trip today. 

 Her 5-year-old son, for the record, is in his third day of kindergarten, and she told 

me she had to catch a later train because he had a little difficulty on his third day. He was 

a little bit sad. So for a parent to leave on the third day of kindergarten is an extraordinary 

effort and I appreciate that. 

Ms. Williams, in your statement, you indicate that your interpretation of HIPAA 

is that group health plans are prohibited from discriminating against enrollment eligibility 

contributions based on any genetic information. Let me ask you this hypothetical: What 

if an employer with 20 employees attempts to enroll in a health plan and there is 

information that one of the employees is highly prone to stroke, given their genetic 

profile? Does HIPAA prohibit the insurance company from selling to the group? 

Ms. Williams. You are talking about a fully insured situation? 

Mr. Andrews. Could the plan not take on the whole group because one employee is so 

inclined? 

Ms. Williams. I do not believe so. Again, my expertise is in self-insured plans. 

Mr. Andrews. How about a self-insured plan, the same thing? 

Ms. Williams. Absolutely not; the employer is the one funding the plan. No one says 

we will not provide coverage. The employer is paying for the coverage himself or 

herself. They have to let everybody in. In a group insurance setting, if you have 20 

people, HIPAA does govern that health plan. 

Mr. Andrews. So it is your position that they could not deny coverage to the entire 

group on the basis of the one individual? 

Ms. Williams. That is correct. 

Mr. Andrews. I am not so sure I agree with that interpretation, but I understand it. 

Ms. Licata, would you favor an amendment to Title VII of the employment 

discrimination civil rights laws to include a genetic predisposition such as race as a 

protected classification? 

Ms. Licata. I think that it would be appropriate to consider that because your genetic 

profile for the genetic background that you are born with is something that you can't 
13

change. It is not necessarily inevitable how those genes will be expressed, but if people 

judge you on your predispositions as to whether it is alcoholism, depression, heart disease 

or cancer, it is something that you can't change. People are going to judge you based 

upon that. 

 So I think, like yourself, the color of your skin, which is determined genetically 

could denote your race, and these are characteristics that people are going to judge you 

on.

Mr. Andrews. What these things have in common is they are immutable characteristics 

that should not be the basis for the evaluation of your fitness for a job. Is that your 

position? 

Ms. Licata. Yes. 

Mr. Andrews. Ms. Trautwein, I appreciate your testimony. 

I know that NAHU embraces a definition of genetic information that should be 

limited to DNA and related gene testing done for the purpose of predicting risk of disease 

in symptomatic or undiagnosed individuals. What if the genetic test is not given for the 

purpose of predicting disease but exists anyway? What if an employee is tested for the 

purpose of having their profile on record and not to predict any given disease, but an 

employer or insurer uses it for that purpose? Why should we limit the definition to 

purposeful testing for disease? 

Ms. Trautwein. Let me make sure I understand your question. What would an insurer 

do this test for? 

Mr. Andrews. They were collecting data to develop models of health care behavior, 

health care risk, and they happen to get data in a particular person in a sample study they 

were doing. It seems to me, under your proposed definition, it would not be illegal to use 

that information in discriminatory fashion because the purpose for which it was collected 

wasn't to predict a disease. 

Ms. Trautwein. I am not an attorney, so I don't pretend to know every law on the books, 

but I don't believe that is legal. I am not aware of any of them that are doing that. In fact, 

we have recently been working with the CBO providing some information on when blood 

work is requested not in groups, but on the individual process. Occasionally they do 

blood work, and we have some information that I would be happy to share with you later 

about what types of tests actually are run. 

Mr. Andrews. Is it your position that what I said should be illegal? Do you think 

genetic information collected for any purpose should be used in a discriminatory fashion? 

Ms. Trautwein. I am certainly not in favor of discrimination. 

 I think the point in my testimony made a different distinction between someone 

who has a current illness and a genetic test that might be used in conjunction with it as 

opposed to someone who is getting some genetic tests run to see if they have markers for 
14

any particular disease. 

Mr. Andrews. I understand and I agree with that distinction.

 Thank you, Mr. Chairman. 

Chairman Johnson. Let me follow up on what he said. I know he asked Ms. Williams 

about whether or not you could stop an employment action under the law currently for 

genetic reasons. Does that apply to fully insured plans too? 

Ms. Trautwein. Yes, it does. I can explain just a little about how that works, because 

there is one thing I might add. In a group of 20, the example that you gave before, if it is 

a fully insured plan, one person's health information could impact the rates the group 

pays whether no matter what kind of health information. 

Chairman Johnson. So they can't deny him insurance but they can charge him more. 

Ms. Trautwein. The whole group could possibly pay a higher rate because of one 

person's health information of any kind in some States. 

Chairman Johnson. That is within the law? 

Ms. Trautwein. Yes. 

Chairman Johnson. Thank you. 

Mr. Fletcher. 

Mr. Fletcher. Thank you, Mr. Chairman. I appreciate you having this hearing. It is 

really a very complex issue. The more you look at it, the more difficult it gets. 

 Let me ask you something, Ms. Licata. You will find this place is not as family 

friendly as we would like for it to be. How do you answer some of the concerns that have 

been expressed here by others regarding the ability to predict rates, actuarial predictions, 

and stability of premiums, to make sure that we provide as much access to health care as 

possible? What experience have you had in New Jersey? What do you think H.R 

602_would do regarding cost predictability and premiums in answer to some of the 

questions that have been brought up? 

Ms. Licata. In New Jersey, under the Genetic Privacy Act, genetic information, cannot 

be used in establishing rates or in a decision to allow a contract or not. That information 

is absolutely prohibited from use, which is, I think, a really good position. 

 The danger is how and where you draw the line. The type of information we are 

talking about under H.R. 602 is predictive genetic information. There are literally 

thousands of genes, more being discovered every day that correlate with all kinds of 

conditions and diseases. For lung cancer alone, there are probably over 1,000 markers. 
15

So there is a ton of information to look at in a particular individual, and find this 

marker, that marker, the other marker, to create a profile for that individual. But all that 

is going to tell you is what markers that person is carrying. It may also give you the 

ability to quote some probabilities whether, at some point in their life, 20 or 30 or 40 or 

50 years from now, one of those diseases or conditions may occur. 

 And even if you took identical twins, who, by definition, have an identical genetic 

makeup because genes must be expressed in context, it is their life experience and their 

environment which is going to control that expression. You have no way of really 

knowing what is going to happen based on that profile. 

 So the New Jersey Act takes the position that information is just probabilities and 

because it could be misinterpreted and there is such uncertainty, you just can't even take 

that into account. 

 H.R. 602 is saying that that particular type of information should not be allowed 

to be taken into account when you are making these types of decisions, and that 

information should be protected as opposed to things that are relevant to current health 

status. If there are some markers that have one change in the genetic code and you are 

going to have a disease, then you are diagnosed with that disease. That information is 

current health status under H. R. 602, and it can be factored into your plan. 

Mr. Fletcher. So if a patient is diagnosed with, let us say, colon cancer, and 

subsequently a colon cancer genetic marker is found the screening that is done in the 

family might change substantially. Would that pre-existing condition still be allowed to 

be used in computing the group rate predictions and premium rate predictability or not in 

that situation? 

Ms. Licata. I think if the status changes in the way H.R. 602 is written, because once it 

is diagnostic, it becomes current health status. 

Mr. Fletcher. So what you are saying is once a disease is diagnosed, genetic information 

is either commensurate or subsequent to that, and that health status is still able to be used 

for predictability of group rates, et cetera, in spite of the fact that genetic information is 

available.

Ms. Licata. Right. That is one of the concerns I have with H.R. 602 is I don't think it 

goes far enough. You know, I understand why there has been a distinction made between 

predictive versus current. 

Mr. Fletcher. Let me say this: If you are not able to predict premiums, then obviously 

you are not going to be able to pay for future health care issues. If there is a subsequent 

diagnosis, I can understand why H. R. 602 does that. How many actions have been 

brought under the New Jersey Act for violations of its provisions, do you know? 

Ms. Licata. I don't know, but I am not actually aware of any. I can check for you. 

Mr. Fletcher. If you can check and bring that back to us, we will enter that into the 

record.
16

SUBMITTED FOR THE RECORD, ADDITIONAL ANSWERS TO QUESTIONS 

POSED DURING QUESTION AND ANSWER PERIOD, JANE MASSEY LICATA, 

J.D., Ph.D., SEPTEMBER 6, 2001 – SEE APPENDIX E 

Chairman Johnson. Thank you. 

Mrs. McCarthy. 

Mrs. McCarthy. Thank you, Mr. Chairman. 

Ms. Williams, in your testimony you basically state that it is virtually impossible 

to write definitions for this law that are not overly broad, so we should not even try to 

pass a genetic non-discrimination bill. And yet, you know I sit here as a nurse and I am 

very comfortable with health care providers and experts in health care policy defining 

terms for this bill. Since you are obviously not comfortable with these definitions, who 

do you think should write the definitions? 

Ms. Williams. I am sorry if that is how my testimony was construed. What I meant was 

it is virtually impossible to write these definitions broadly enough to encompass all the 

administrative tasks that are involved in how that information is needed. I do think 

HIPAA has gone a long way in doing that in the privacy regulations, because they 

include payment of claims, which I think most legislation always recognize is a needed 

task of plan administration, and that medical information must be needed for that. 

 They go further to include health care operations, which includes providing that 

information for getting stop-loss coverage, for doing quality assurance, for doing 

wellness programs, and disease management programs within the plan. H. R. 602 doesn't 

do that right now, and most legislation coming out of State and Federal areas doesn't do 

that. It was only after 2 years of commentaries that HHS inserted the broader language to 

include some of those vital administrative tasks. 

 So I think the most important thing to employers is that the people that write the 

legislation understand how a health plan actually operates and make sure that any 

definition of payment of a health claim or health care operation includes these other tasks 

that the general public isn't aware of, and certainly the employees aren't aware of that go 

on.

Mrs. McCarthy. Thank you. 

 Ms. Trautwein, I am curious especially about life insurance because I just went 

through it. And basically the questions they asked me were about my family, my mother 

and my father, certainly my brothers and sisters. There were medical histories of high 

blood pressure and cholesterol, and I am on cholesterol pills. 
17

So I am curious, would underwriters for life insurance look at those markers, 

because I consider them markers? If my mother had high cholesterol, and I have high 

cholesterol, why should they give me life insurance, because obviously even though I am 

in good health, take care of myself, and eat the right foods, my cholesterol is high. I still 

have a higher risk down the road of having a heart attack or a stroke. Why would you 

even want to take a risk on someone like myself? 

Ms. Trautwein. Well, I am actually glad that you asked about that. First of all, let me 

distinguish between health insurance underwriting and life insurance underwriting. It is 

different for the two. I represent health underwriters, but I know the answer to your 

question having done that in a previous life. 

 First, family medical history is never asked for at all during the group process that 

you just described regarding parents, siblings and so forth for health insurance. It is only 

occasionally asked for, and we just completed a survey. By occasionally I mean, I found 

only three insurance companies in the United States that asked these questions on health 

insurance.

 On life insurance it is different. And what is different is that actuaries for life 

insurance base rates on mortality as opposed to morbidity. It is whether you are going to 

die because that is when their claim is going to be paid, or if you are going to be sick. 

The underwriting is completely different for life insurance as opposed to health 

insurance.

 I just want to point out that we are not talking about restrictions on life insurance 

underwriting. I can't rightfully speak for the life insurance industry who may, at some 

point, decide as you have stated, that legitimate genetic tests, are in the same category as 

family medical history. 

 I can tell you how your family medical history was used on your application. It 

was not considered on its own. Each ramification is considered on a point system. Your 

current history is given far greater weight than anything else. They only look at the 

additional items if they want confirmation of a particular thing. For example, a family 

medical history might be the third or fourth item if you have three other risk factors, for 

example. So the weight is small on that compared to the other items that are current. 

Mrs. McCarthy. Thank you. 

Chairman Johnson. Thank you, Mrs. McCarthy. Good questions. 

Mr. Payne. 

Mr. Payne. Thank you.

I understand that the Health Insurance Portability and Accountability Act of 1996 

does not and would not prohibit group health insurers or health plans from requiring or 

requesting genetic testing. I have heard your testimony that it is against the law to 

discriminate, however, there seems to be loopholes and I just wonder, Ms. Williams or 

Ms. Licata, how you feel about legislation which would prohibit discrimination in 
18

employer-provided health plans based on genetic findings? 

Ms. Williams. That is what HIPAA does. It expressly in ERISA, prohibits 

discrimination based on genetic information. And genetic information is one of the line 

items in that portion of the statute. I think it is absolutely a good thing, and HIPAA does 

it now. 

Mr. Payne. However, weren't there some cases under ADA where persons sued the 

insurer for genetic discrimination? 

Ms. Williams. The ADA and HIPAA and ERISA do interact, but not that much because 

HIPAA and ADA are more than employment driven statutes, in that they govern the 

conduct of the employer in general. ERISA is just really governing the conduct of the 

health plan and the employer as a plan administrator. 

 So there may be cases, but I can't speak to whether employers did or did not get 

health information from the health plan in a discriminatory fashion. The ADA may have 

spoken to that. But the cases arising out of the ADA are generally not directed at the 

employer's activities for administering their health plan. I hope I have made the 

distinction clear. 

 H. R. 602 and other legislation that has been presented, attempts to amend many 

different parts of many different laws, and some may be perfectly warranted, including 

any amendments to the Civil Rights Act or ADA. What I am trying to get across is that 

the amendments to ERISA, have already met the goal of non-discrimination. The major 

amendments to ERISA that are broadening this genetic discrimination line item and 

expanding on the definition, don't add to the fact that employers cannot discriminate in 

their health plan based on genetic information now. It is prohibited. 

 What it does do is try to further hinder the employer as administrator of a health 

plan from disclosing information in ways that it needs to administer the plan. For 

example, we have been talking about genetic tests and genetic information. But H. R. 

602 goes beyond that. It talks about genetic services, that is, treatment for genetic 

conditions, and H. R. 602 limits the way in which health plans can disclose that. 

 So any time you start talking about limiting disclosure of actual treatment, that is 

where a health plan runs into problems because it doesn't care what the treatment is for, 

but it cares how much it paid because it needs those figures to give to its stop-loss carrier, 

it needs those figures to figure out what it is going to owe next year. That is where this 

legislation, even other legislation that is currently on the table right now, has gone further 

than it needs to accomplish the goal that we have achieved. 

Mr. Payne. Ms. Licata? 

Ms. Licata. I guess there are a couple of loopholes in HIPAA. One is that they would be 

free to raise the rates for the group as a whole based on predictive genetic information of 

a member. Again, we are talking about using information that does not necessarily 

indicate what is going to happen, but that can affect the whole group. So that is an issue 

that is a loophole currently in HIPAA. 
19

In addition, I think it is a big issue in terms of how we are going to look at this 

type of information, because there is going to be a lot of it available very soon. These 

diagnostic tests are currently available and there is more and more information that is 

going to become available. We are going to actually be in a situation where we may have 

more information than people can properly interpret and judge appropriately what is 

going to happen. 

 I think the line that is drawn in H.R. 602 is between the here and now. That is 

somebody is sick and they are being taken care of under a health plan and information, 

which is going to talk about what might happen in the future and for the counseling and 

care that, might be attendant to that. 

 I think the definition of "predictive" or now protected information in H.R. 602 is 

extremely crafted, and it has evolved where we are saying if you are getting this 

information, to identify these markers rather than to diagnosis a current health status, that 

is really a different kind of thing. 

 I don't really understand why you have to have that information to calculate your 

rates. I also think that once you open Pandora's box and you make this information 

available, it is incredibly enticing to take a look at it. I mean, if you knew that you had an 

employee that had a strong predisposition based upon their genetic profile to violence or 

to alcoholism or to some kind of physical condition that might be relevant in the 

workplace, it would be very tempting to factor that information in and probably 

impossible for the employee to ever prove that it was taken into account.

 Therefore, I think we can draw a bright line and take a firm policy that this type 

of information is so personal, so intimate, and has such a huge impact on both the 

individual, their family and our society, that we need to be clear that that type of 

information should be at least as protected as something like HIV status. That would go 

a long way to make it easier for the employers as well to implement their plans. 

Chairman Johnson. Thank you very much. 

Mr. Fletcher do you have a follow-up question? 

Mr. Fletcher. Thank you. 

Ms. Trautwein let me ask you something. You specifically referenced the issue of 

cholesterol screening in your testimony. How is cholesterol testing addressed in various 

legislative proposals that have been sponsored on this issue and how would the inclusion 

of cholesterol in a category of protected information impact current procedures with 

regard to health care insurance? 

Ms. Trautwein. Well, currently, we can talk about two bills, and we can categorize it 

like that. There is a bill in the Senate, Senator Snowe's bill, S. 382, which has some 

language that has been used in several other bills. It includes in its exceptions what is not 

genetic information, information about current physical exams, lab work, so forth, and it 

specifically names cholesterol screening. H.R. 602 does not do that. It does not name 

any specific tests. We have a particular concern about cholesterol screening.
20

Cholesterol screening is a metabolite test. There are many genetic tests that we 

consider legitimate genetic tests that are also metabolite tests, and we are concerned that 

cholesterol screening not be spelled out. It comes back to this issue of it being predictive 

genetic information. There are millions of dollars of claims paid every year for 

cholesterol lowering medications. If cholesterol testing moves from a category of a 

diagnostic test into that of a genetic test, it no longer would have a diagnostic code, 

because it is not a diagnosis when your test comes back high. 

 Every insurance claim has to have a diagnostic code to be paid, and we are 

concerned that this is one of the big unintended consequences that could occur, not to 

mention the underwriting process in accomplishing the actual overall health of a person 

currently. This other unintended consequence could easily happen, because it would lose 

its diagnostic code if it were no longer a diagnosis and went into another category. 

Mr. Fletcher. Let me ask you something. Say there is a true genetic test that shows 

predictability of coronary artery disease and maybe the effect of a certain cholesterol 

spectrum that one of the current medications or developed medication could treat. The 

thing I get concerned about under this scenario I have spelled out is that I do want to 

predict the genetic information and prevent discrimination, but I also realize that from the 

provider's side there has to be the ability to access the information. If we are going to 

start this patient on some preventive medication, we have got a genetic predisposed 

diagnosis, but we don't have, quote, the diagnosis like hyperlipidemia. Then we use our 

coding system to bill Medicare or Medicaid, the government, or a group or fully insured 

product.

 How is that going to play into all this? Are we going to be able to say this visit 

was regarding that particular treatment for this predisposition? I mean that is where we 

are going. In Medicare right now, we can only order a complete blood count for certain 

things. Everybody all of a sudden has fatigue; because that is one of the things we can 

order it for. You are going to push the provider to use other codes to avoid the problems 

that come from unintended consequences of the things we are trying to protect. I wonder 

if there are any comments on that? 

Ms. Trautwein. Well, the only comment I would make is that this is obviously a 

changing dynamic. The advances in this science are rapid, but in terms of your specific 

question about diagnostic codes and how you mark it payable, I think that is going to 

have to evolve over time. 

Mr. Fletcher. Well, would that be a viable diagnosis, especially in a self-administered 

plan? Now, I know as of April 14th when we institute privacy, there may be these 

electronic and physical laws, but how is that information given to an employer in that 

situation for reimbursement? 

 Maybe Ms. Williams wants to comment? 

Ms. Williams. You are correct in that the only way that an employer can reimburse, 

either through a self-funded or a fully insured plan, is by the diagnostic code. They have 

got to go above and beyond to make sure that whatever treatment this patient received is 

covered by the terms of the plan, because some things aren't covered by the terms of the 
21

plan. So if there is not a clear diagnosis they would not be able to pay the treatment 

claim. 

 Now, employers are not concerned with the diagnosis code. As far as their claims 

administrator, they may see that the treatment was medically necessary for the diagnosis 

and match those up, but as far as getting a diagnosis code, they need it to pay the claim, 

but they are not that concerned with what it is. 

 Now, doctors, like you say, in an effort to get their claims paid, are going to have 

to code these things is a different matter. The health plan would have no way of knowing 

that that was going on. 

Mr. Fletcher. Well, the concern I get is the fact that we are going to see more policies 

written to avoid the conflict that I have just mentioned, and then you actually reduce the 

ability to treat patients preventively. And in the future we are moving toward prevention 

of diseases, so the genetic information is going to be essential for the provider to have. 

Whether there is going to be a change in reimbursal regarding this, remains to be seen but 

it is going to have a substantial impact on how policies are written, how reimbursements 

are done and coding. All that needs to be taken into account when we pass some 

legislation that tries to protect a right, not understanding the unintended consequences 

may do just the opposite on the patient's health. 

Ms. Williams. You are right. And employers have a legitimately strong interest in 

preventing health problems. It is good for their financial bottom line to prevent health 

problems. It increases their productivity. That is why a lot of the preventive 

maintenance and wellness and the disease management programs are in effect. They don't 

want those programs to be hurt by the failure to be able to disclose information. So 

certainly they would have an interest in that. 

Chairman Johnson. Thank you, Doctor. 

Mr. Andrews do you have a follow-up? 

Mr. Andrews. Mr. Chairman. I will be brief. One of the strong concerns that we have 

is consent and whether it is really informed consent for the use of a test. If I am not 

mistaken, genetic testing is generally done by drawing someone's blood, and although a 

skilled student or observer like Mrs. McCarthy, who is a nurse, might know to ask what it 

is going to be used for, I would trust that most of us don't do that when our blood is 

drawn for, quote, medical tests. We just have it drawn, and off it goes to the lab, and we 

sign the printed forms at the lab and go on our way. 

 How often do people ask what these tests are going to be used for? Is there any 

data on that? And if they do ask, how might we make sure that the explanation that 

someone is given truly aides in informed consent, and they don’t just thinks they are 

being tested for cholesterol or some other problem? In other words, how broad is the 

scope of the consent that someone gives and how can we ensure that people know what 

they are agreeing to when they go to give the sample? 

Do you have any ideas on that? 
22

Ms. Licata. I can address that. 

 Currently a lot of identification of markers and creating correlations has been 

done on a research basis. So when people agree to participate in the research, they are 

very well informed. The protocol has to be reviewed and approved by an institutional 

review board. They are given a written consent, which explains what the biological 

material is going to be used for, and certain assurances as to what will happen to the 

material. In many cases the information will not have identifiers on it, so that you 

couldn't necessarily match up that data with the individual. 

Mr. Andrews. What about the case where it is not a study, and an employee agrees, and 

signs a consent form to give blood to test for high cholesterol. Should the employer or the 

health plan be able to use that blood sample to test for other conditions? 

Ms. Williams. No. No. The taking of blood or any other treatment that an employee 

receives is an issue between the health care provider and the employee. The employers 

wants no part in that process. The employer as an administer of a health plan would have 

no reason for having a provider do additional testing, and as you are talking about the 

administration of a health plan, that doesn't occur. Whether employers as employers or 

for other purposes other than their health plan are doing that, I don't know. But if they 

are, amendments to ERISA aren't going to change that. As far as group health plans, they 

are not doing it. 

Mr. Andrews. Ms. Trautwein, do you think the consent authorization should spell out 

the specific use of blood and that any other uses should not be authorized? 

Ms. Trautwein. Probably so. 

 Let me tell you how it is actually done now. Blood draws are not done in the 

group market at all. It is just not done. They are done in the individual market 

occasionally. The disclosure that someone signs authorizes a check of the information 

base and the information provided on the application. So it would be to confirm other 

things. We have not found anyone that screens for anything genetic. Drug screens are 

common, quite common, and complete blood counts and those types of things. 

 But the consent currently does not spell it out. Do we think it should? I am not 

sure about the answer to that. I think as long as it references information back to the 

questions that are asked on the application, because it could be quite lengthy. 

Mr. Andrews. Aren't the applications so broad and cover so many conditions that you 

could reference it back to almost anything if you wanted to? 

Ms. Trautwein. I don't know the answer to that. I think that insurance carriers should 

answer that, the ones that actually do the blood work. 

Mr. Andrews. With the Chairman's consent, we do have some examples of insurance 

company questionnaires we would like to put into the record after the hearing, and with 

that I would yield back. 
23

Chairman Johnson. I don't have an objection. So ordered. 

Regarding that question that he just referred to about a broad definition, you 

indicated that would possibly cause rates to go up, because there would be no idea what 

would be done and what the cost would be. Is that true? 

Ms. Trautwein. First of all, I just want to make clear, we are opposed to genetic 

discrimination. We are just concerned about what genetic information is, and if it 

normally includes items that are on an everyday basis regularly included in the 

underwriting process that have to do with current health status that are not predictive in 

nature. We are concerned about those items, because when an underwriter does not have 

the information they need to underwrite that application, they do underwrite more 

conservatively, which means they add a little in it for errors. 

Chairman Johnson. I understand. You also indicated that there are many State laws 

that regulate the underwriting and privacy aspect of genetic discrimination. How have 

the States defined genetic tests and protected information? 

Ms. Trautwein. Well, they have defined it in a variety of ways. I haven't found any two 

States actually that define it exactly the same way, and you all probably have done some 

research in that regard as well. 

Chairman Johnson. None of us define it the same way either. 

Ms. Trautwein. A number of them actually use the word "predictive" in there. A 

number of them imply that the information should be predictive in nature. Most of them 

spell out the types of genetic tests. Some of them use the word "inherited 

characteristics," which means family medical history. And that is also the main primary 

categories. None of the States have done it exactly the same way. Some of them extend 

the prohibition on eligibility only. Most of them extend it to eligibility and 

discrimination in the underwriting process. Some of them do only health insurance. 

Some of them extend it to life, long-term disability, and long-term care insurance. So it 

is different in every State. 

Chairman Johnson. You can't define it. 

 We appreciate all three of you being here. Your time is valuable, and your 

testimony was great. I appreciate the Members who were here for their participation and 

their testimony, and if there is no further business, this Subcommittee stands adjourned. 

 Thank you. 

Whereupon, at 3:14 a.m., the Subcommittee was adjourned. 
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29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90

Table of Indexes 

Chairman Johnson, 1, 4, 6, 9, 10, 11, 12, 14, 16, 17, 19, 21, 23 

Mr. Andrews, 12, 13, 14, 21, 22 

Mr. Fletcher, 14, 15, 19, 20, 21 

Mr. Payne, 17, 18 

Mrs. McCarthy, 16, 17 

Ms. Trautwein, 13, 14, 17, 19, 20, 22, 23 

Ms. Williams, 9, 10, 11, 12, 16, 18, 20, 21, 22