Health insurance companies are often at an advantage because they must pick from a desira
Health insurance companies are often at an advantage because they must pick from a desirable selection of customers.
12) There is asymmetric information in the auto insurance market because companies know more about customers' driving habits and can predict very well the chances of customers getting into an accident than the customers.
13) As more high-risk consumers enter the health insurance market, the average cost of health insurance service decreases.
14) A firm's health insurance premiums that are based on an experience rating are affected by the amount of medical claims by the firm's employees.
15) One implication of asymmetric information in the insurance market is that many low cost consumers who are not eligible for a group plan will carry individual insurance.
16) Most of the working-age people in the U.S. have private health insurance.
17) Explain why the insurance market suffers from the adverse-selection problem.
18) Would a firm whose health insurance premiums are based on an experience rating be more likely to develop health and safety educational programs for its employees? Explain why or why not.