The 2010 Health Care Reform Law, also known as "Obamacare," includes a part known as universal coverage which requires everyone to have health insurance. One reason for this is to address the
Problem of
A) moral hazard.
B) externalities.
C) adverse selection.
D) eﬃciency losses.

Question

Quizplus · Accepted Answer

The requirement for everyone to have health insurance is meant to address the problem of adverse selection in the insurance market. Adverse selection occurs when those who are most likely to have higher healthcare costs are the ones who seek out and purchase insurance, which can lead to higher premiums for everyone. By requiring everyone to have insurance, the risk pool is balanced and premiums can be more accurately priced.

The 2010 Health Care Reform Law, Also Known as "Obamacare