People with hidden health problems are more likely to buy health insurance than are other people. This is an example of
A)moral hazard and makes the cost of health insurance higher than otherwise.
B)moral hazard and makes the cost of health insurance lower than otherwise.
C)adverse selection and makes the cost of health insurance higher than otherwise.
D)adverse selection and makes the cost of health insurance lower than otherwise.

Question

Quizplus · Accepted Answer

This is an example of adverse selection, where individuals with a higher risk of needing healthcare (due to hidden health problems) are more likely to purchase health insurance. This can lead to a higher average cost for the insurer, which in turn can lead to higher premiums for all insured individuals.

People with Hidden Health Problems Are More Likely to Buy