The adverse selection death spiral occurs when private insurance companies:

Question

Quizplus · Accepted Answer

The adverse selection death spiral occurs when private insurance companies charge higher-than-average prices for health insurance because only sick people want it, which in turn further drives off healthy individuals and leaves only sicker, high-cost individuals, resulting in yet higher premiums the following period. This creates a cycle that ultimately leads to the collapse of the insurance market, as only those who absolutely need insurance are willing to pay the high prices, leaving the healthy population without coverage.

The Adverse Selection Death Spiral Occurs When Private Insurance Companies