Adverse selection: Does it preclude a competitive health insurance market? (original) (raw)

This paper discusses the implications of adverse selection in the context of a competitive health insurance market, particularly within a pluralistic multipayer system. It analyzes why health insurers have been slow to classify risks effectively and questions the feasibility of private insurance markets with individual choice, based on empirical evidence from studies such as the Rand Health Insurance Experiment. The findings suggest that the prevailing insurance mechanisms may inadvertently reinforce issues of adverse selection, leading to potential market inefficiencies.