Consider the market for health insurance for medium-size employers (50-100 employees) after January 1, 2014. Under the PPACA, such employers will be subject to penalties if they don't offer health insurance to their workers, and health insurance exchanges should be able to present an attractive option for them to offer coverage. At the same time, an alternative opportunity to buy coverage outside of the state exchanges will still remain.
Keeping in mind that premiums for each employer group will depend on the average age of the entire pool of employees and some companies may tend to have a primarily older (or younger) workforce, discuss the potential impact of this policy on both markets: within vs. outside of health insurance exchanges. Are adverse selection issues likely to arise in any of these markets? Justify your answers.

Question

Consider the market for health insurance for medium-size employers (50-100 employees) after January 1, 2014. Under the PPACA, such employers will be subject to penalties if they don't offer health insurance to their workers, and health insurance exchanges should be able to present an attractive option for them to offer coverage. At the same time, an alternative opportunity to buy coverage outside of the state exchanges will still remain. 
Keeping in mind that premiums for each employer group will depend on the average age of the entire pool of employees and some companies may tend to have a primarily older (or younger) workforce, discuss the potential impact of this policy on both markets: within vs. outside of health insurance exchanges. Are adverse selection issues likely to arise in any of these markets? Justify your answers.

Quizplus · Accepted Answer

The Answer of Consider the market for health insurance for medium-size employers (50-100 employees) after January 1, 2014. Under the PPACA, such employers will be subject to penalties if they don't offer health insurance to their workers, and health insurance exchanges should be able to present an attractive option for them to offer coverage. At the same time, an alternative opportunity to buy coverage outside of the state exchanges will still remain. 
Keeping in mind that premiums for each employer group will depend on the average age of the entire pool of employees and some companies may tend to have a primarily older (or younger) workforce, discuss the potential impact of this policy on both markets: within vs. outside of health insurance exchanges. Are adverse selection issues likely to arise in any of these markets? Justify your answers.

Consider the Market for Health Insurance for Medium-Size Employers (50-100