How Health Insurance Companies Prevent Adverse Selection
Heres a grossly simplified example. Lets say a health insurance company was selling a health plan membership for $500 per month. Even after paying thedeductible, this insurance is still a great deal. Eric Audras ONOKY / Getty Images In an unregulated health insurance market, health insurance companies would usemedical underwritingto venture to avoid adverse selection. And conversely, insurers with plans that attract healthier enrollees will have to pay into the risk adjustment program....