Insurance makes money by ensuring their income (premiums) is greater than their outgoing (payouts).
The value of insurance (and why we pay for their profits) is in spreading risk across populations. They already target particular demographics (when the law allows them to), but I'm talking about targeting individuals.
If the insurance company can predict exactly how much they will be paying out to you in the next 10 years, say, then they just become a glorified savings account with a cost attached (their profit). The value is then essentially telling you how much you need to save. Data companies like 23&Me could then offer this without bothering with the savings account part.
My feeling is people won't accept this and will want actual insurance policies that actually spread risk across populations because people don't want to be told "you need to save twice as much as your neighbour because of your cancer in 15 years time".
Unless they have a crystal ball and can tell you whether or not you will be involved in an accident leading to serious injury (and the nature of those injuries) then you still need health insurance.
I know a guy who was robbed and shot. Had to have surgery and spent a few weeks in the hospital.
I have a neighbor that was jogging, tripped over a bump in the sidewalk and broke his arm. Few weeks in a cast.
I know plenty of blue collar workers who had on the job injuries that required medical treatment.
Your DNA isn't going to help with that. And in America, a simple 4 hour visit to the ER can result in a multi-thousand dollar bill. And if you're unfortunate enough to need a surgery and a multi-week stay then we're talking 5 figures minimum.
As insurance risk estimation errors approach zero, the value of having insurance instead of just a medical savings account approaches zero. Rates for higher risk individuals will become prohibitively high and those people will have no choice but to be uninsured. Insurance companies would be essentially only covering black swan events, as individual premiums would match individual health costs with high fidelity.
As a result the incentive to get comprehensive health insurance rather than just disaster insurance would plummet, as an MSA would be more cost effective and you also get to take advantage of better than predicted health outcomes in the form of interest earned and at EOL a potential inheritance gift.
Sounds great, except you jhave to understand that this would mean that society would somehow need to deal with the burden of the least healthy, who would be very unlikely to purchase, or be able to afford, insurance under this scheme. Itβs like trying to charge up front for building roads. You just end up with no roads. Socialism (or in the case of insurance,capital funded socialism) is extremely beneficial to society in certain specific verticals.
What? How is it you think insurance companies make money exactly? And why would getting better at predicting risk stop them doing that?