Risk selection" refers to -- a.the incentive of insurance companies to avoid enrolling people who are in worse health and likely will require costly medical care. b.the phenomenon of individuals waiting until they are sick before purchasing health insurance. c.the process by which the Federal government identifies individuals at greatest risk for needing costly health care and provides them special high-risk insurance coverage. d.the incentive of shareholders to avoid investing in insurance companies which insure the most high risk patients.

In financial terms, risk is defined as the chance that the actual gains from an outcome or…

Answered: Risk selection" refers to -- a. the…

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter19: The Problem Of Adverse Selection

Section: Chapter Questions

Problem 1MC

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Risk selection" refers to --

	a.	the incentive of insurance companies to avoid enrolling people who are in worse health and likely will require costly medical care.
	b.	the phenomenon of individuals waiting until they are sick before purchasing health insurance.
	c.	the process by which the Federal government identifies individuals at greatest risk for needing costly health care and provides them special high-risk insurance coverage.
	d.	the incentive of shareholders to avoid investing in insurance companies which insure the most high risk patients.

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