Suppose ABC Health is a private health insurance company that offers a one-size-fits-all policy to all customers.Each customer pays a premium equal to the average consumer's annual medical expenses.This is a system that has the potential to fail due to the:

Question

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The one-size-fits-all policy offered by ABC Health can lead to adverse selection, where healthier individuals are less likely to sign up for the policy while sicker individuals are more likely to sign up, causing medical expenses to be higher than the average. This can lead to the company losing money and potentially going bankrupt.

Suppose ABC Health Is a Private Health Insurance Company That