There is a difference between a "designer baby" and a baby with severe mental/physical issues that could not survive without medication/surgery.
A very important difference when offspring is very undeveloped, the situation was diagnosed at 4 months into the pregnancy. If the surrogate didn't understand what the diagnosis meant then she eventually will understand, and I doubt if it will be all that happy for the child.
But this does not take into consideration the fact that in genetic testing the incidence of false positives are substantial, as well as the potential that these tests can cause miscarriages as well- I think chorionic villus sampling is like 1 in 100. Those are not great odds.
http://www.rhtp.org/fertility/prenatal/
Maternal serum screening measures levels of fetal proteins circulating in the mother’s blood, which may indicate a disorder. Physicians now commonly screen for three or four proteins in the mother’s blood to screen several conditions that are linked to mental retardation and congenital birth defects. Maternal serum screening is done around 15 to 20 weeks. Test results are reported as odds. If the odds are equivalent to or higher than that of a 35 year old, further counseling about prenatal genetic testing is recommended.
However, there are significant false positive and false negative rates.
First trimester screening is a new option that is not yet widely available in the United States. It uses the combination of first-trimester ultrasound and a blood test to assess a woman’s risk of having a child with Down Syndrome or other chromosomal abnormalities. Abnormal results from screening tests provide information about the risk that the fetus has a chromosome abnormality.
There is a 5 percent false positive rate.
Prenatal diagnosis of genetic abnormalities in a fetus requires two steps: an invasive procedure to obtain fetal genetic material and an analysis of the material to identify genetic abnormalities.
Amniocentesis is generally considered a relatively simple and safe procedure when performed by an experienced physician. Although miscarriage after amniocentesis is rare (one in 200-400 cases), it is a reason the procedure is not generally offered to all women. Amniocentesis is usually performed in the second trimester of pregnancy. Amniocentesis can be performed as early as 11 weeks, but is considered too risky by most providers.
Chorionic villus sampling (CVS) is an alternative to amniocentesis, and can be performed during the first trimester of pregnancy – typically at 10 to 13 weeks. Fetal cells are obtained through biopsy of the chorionic villi – the cells that will become the placenta. CVS can be used to determine virtually all disorders that can be diagnosed by amniocentesis except the presence of neural tube defects, because CVS does not include analysis of amniotic fluid for alpha-fetoprotein. Fewer doctors have been trained to perform CVS than are trained in amniocentesis, and as a result, it is not offered in all areas.
Risk of miscarriage after CVS is approximately 1 in 100.