Group health plans,that offer policies covering all of a firm's employees,can partly address the adverse selection problem by:
A)increasing the incentive to take care of one's health.
B)reducing the likelihood that high-risk people will be overrepresented.
C)limiting the coverage provided to people with existing health problems.
D)increasing the probability of a person falling sick.

Question

Quizplus · Accepted Answer

Group health plans cover all employees regardless of individual health status, reducing the likelihood that high-risk individuals will be overrepresented in the plan and balancing out the risk pool. This helps to address the adverse selection problem to some extent. Choices A, C, and D are incorrect as they do not address the adverse selection problem directly.

Group Health Plans,that Offer Policies Covering All of a Firm's