What Is the Effect of Adverse Selection in a Premium

question 8

Multiple Choice

What is the effect of adverse selection in a premium support system for Medicare?

• A) It raises the costs to the sickest individuals.
• B) It raises the costs to the healthiest individuals.
• C) More individuals choose the higher level of insurance coverage.
• D) Premiums are reduced for everyone.

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Definitions:

Romantic Love

A complex emotion often characterized by intense affection, attraction, and desire for a partnership with another person.

Robert Sternberg

An American psychologist best known for his theory on intelligence and creativity.

Commitment

implies a pledge or promise to do something, often requiring dedication and loyalty.

Sternberg's Triangular Theory

A theory of love proposed by psychologist Robert Sternberg, which posits that love consists of three components: intimacy, passion, and commitment.