In the health insurance market, adverse selection occurs when
A) chronically ill people buy health insurance.
B) insured people go to the doctor unnecessarily.
C) patients sue their doctor.
D) people with health insurance tend to behave more recklessly.

Question

Quizplus · Accepted Answer

Adverse selection occurs when individuals with a higher risk of needing medical care, such as chronically ill people, are more likely to purchase health insurance, leading to a disproportionate number of high-risk individuals in the insurance pool.

In the Health Insurance Market, Adverse Selection Occurs When