Dayton Business Daily

Which of the following represents the problem of adverse selection for a health insurance company?

Which of the following represents the problem of adverse selection for a health insurance company? A. Insured people tend to behave more dangerously and take greater health risks. B. When insured people become ill, they have difficulty paying insurance premiums. C. People with unhealthy habits are more likely to sign up for health insurance than healthy people

Public Comments

1. B. Sick people need insurance the most, but if they are too sick to work, they cannot afford the premiums.
2. c. adverse selction means that mostly people who are high risk will try to get the policy and the low risk people don't bother with it.
3. C
4. C. "Adverse selection" means that the people likely to select (i.e. sign up for) it are those more likely to use it. the other two, which could also be true, are not defined by this term.
5. C is true