Genetic testing, income distribution and insurance Markets

In many countries, fears that genetic testing may lead to a "genetic underclass" have led to restrictions on insurance companies' access to genetic information. This paper first shows that such restrictions are Pareto inefficient. The real problem appears to be that in the absence of such restrictions, outcomes on health insurance markets would be very inequitable. This paper analyses income redistribution policies to correct this, when income endowments differ in a way that may or may not be correlated with risk type.