Broadly embraced in Congress, the anti-discrimination measure aims to ensure that advances in DNA testing won't end up being used against people.
The new law forbids employers and insurance companies from denying employment, promotions or health coverage to people when genetic tests show they have a predisposition to cancer, heart disease or other ailments.
Bush praised the bill for protecting "our citizens from having genetic information misused."
Sponsors of the legislation call it a groundbreaking protection of civil rights. About a dozen of them gathered in the Oval Office as Bush signed the bill, but not Sen. Edward Kennedy, to whom the president paid particular tribute.
Kennedy, who learned this week that he has a malignant brain tumor, has called the genetic anti-discrimination bill "the first major new civil rights bill of the new century." The Democratic senator from Massachusetts left the hospital on Wednesday.
"All of us are so pleased that Senator Kennedy has gone home, and our thoughts and prayers are with him and his family," Bush said.
People today have far more information about their hereditary disposition to crippling afflictions. Bill sponsors said that has increased the likelihood that insurers or employers might deny people work or insurance to avoid costly risks.
"This is a tremendous victory for every American not born with perfect genes
-- which means it's a victory for every single one us," said Rep. Louise Slaughter, D-N.Y., one of the bill's key sponsors. "Since all of us are predisposed to at least a few genetic-based disorders, we are all potential victims of genetic discrimination."
Genetic tests look for alterations in a person's genes, and abnormal results can mean that someone has an inherited disorder. The tests look for signs of a disease or disorder in DNA taken from a person's blood, body fluids or tissues.
Researchers have supported the bill because Americans have been refusing to take genetic tests or have been using false names and paying cash because they didn't want the information used against them by their employer or insurance company.
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The new law prohibits health insurance companies from using genetic data to set premiums or determine enrollment eligibility.
Federal law already bans discrimination by race and gender.
Congressional efforts to protect people from genetic discrimination go back more than a decade.
Genetic testing can lead to early, lifesaving therapy for a wide range of diseases with hereditary links such as breast and prostate cancer, diabetes, heart disease and Parkinson's disease. Yet increasingly, people fear that the data gleaned from such tests will be used against them.
A 2001 study by the American Management Association showed that nearly two-thirds of major U.S. companies require medical examinations of new hires.
Each person probably has six or more genetic mutations that place them at risk for some disease, according to the National Human Genome Research Institute.
The House voted 414-1 for the new legislation. The Senate passed it in a 95-0 vote.
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