If the beneficiaries enrolled in non-grandfathered plans are lower-cost than other beneficiaries, the general individual market health insurance pool might have experienced smaller reductions in adverse selection
with the implementation of the ACA.
Because insurance is a risk shifting mechanism, adverse selection
in the purchase of insurance may be influenced by the length and type of contract (e.g., higher risk individuals choose greater coverage and longer term contracts; Dionne & Doherty, 1994); the person's ethnic background (Zuvekas & Taliferro, 2003); the risk of specified outcomes (Wang & Fischbeck, 2004); and whether the person has submitted to genetic testing (Hoel, Iversen, Nilssen, & Vislie, 2006).
There are no simple answers to the adverse selection
problem, other than insisting that everyone purchase the insurance.
Consequently, we expect a lower magnitude of the spreads, of the adverse selection
component of the spread, and of the PIN for those issues where additional information is revealed between the filing of the prospectus and the offer date.
This cycle, or "death spiral," of adverse selection
is a significant concept in underwriting and an important reason to understand how rigorous the other insurers in your market are compared to your current methods.
Bush's proposal to exempt from income taxes up to $15,000 in health care expenses for everyone--even those not covered under employer plans--lacks compulsion, doesn't help low-income groups, does not address problems of adverse selection
, and is too generous toward high-income groups.
Researchers use several approaches to identify adverse selection
. (1) Genesove (1993) tests the proposition that, in a lemons market, prices inversely relate with observable seller characteristics that correlate with seller incentives to select goods adversely.
In this article, we investigate the empirical tractability of the adverse selection
risks associated with capital structure from 4,114 first-round Canadian venture capital investments.
, Declining Occupancy: The Negative Outlooks on classes E and F reflect the transactions increasing concentration and adverse selection
"The general deterioration in the non-standard automobile line of business has been partially driven by economic conditions, significant price competition and adverse selection
from large personal automobile writers with greater scale and pricing granularity."
Loss Coverage: Why Insurance Works Better With Some Adverse Selection
provides an interesting critique of the orthodox views many insurance academics and industry professionals have regarding the "problem" of adverse selection
My article last week stated that large losses on HECM reverse mortgages could be attributed to adverse selection
. The program was attracting too many of those in desperate financial condition and too few of those with options.