Community rating regulations require insurance companies to charge everyone the same premium, with sometimes slight adjustment for age and gender, regardless of a person's health status. This regulation _____ adverse selection. _____ people and _____ people are _____ likely to buy insurance because the companies cannot legally offer them _____ premiums based on their risk factors.

Question

Quizplus · Accepted Answer

Community rating regulations worsen adverse selection because low-risk, healthy people are less likely to buy insurance when they cannot be offered lower premiums based on their lower risk factors.

Community Rating Regulations Require Insurance Companies to Charge Everyone the Same