Thursday, July 25, 2013

Adverse Selection in Action

This article attributes the steep decline in health insurance prices in New York to "competition" when the far bigger effect is simply adverse selection. Before Obamacare, insurers had to sell to anyone who wanted to buy in NY, but not everyone was required to buy, so only the least healthy would buy individual insurance, driving the prices up. The real change was requiring healthy people to buy insurance as well.
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