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.
E) chronically ill people are unable to buy health insurance.

Question

Quizplus · Accepted Answer

Adverse selection occurs when individuals with a higher risk of needing healthcare (such as those who are chronically ill) are more likely to purchase health insurance. This creates an imbalance in the risk pool and leads to increased costs for insurance companies, which can lead to higher premiums for everyone.

In the Health Insurance Market,adverse Selection Occurs When