Answer the following questions:

Adverse selection is a fundamental problem in health insurance markets. If you were focused primarily on solving this problem, would you choose a Beveridge, Bismarck, or American (pre-ACA) model? Explain how that model handles adverse selection and why it is superior to the others in this respect.

AND

Many people are concerned about insurance companies' treatment of workers with pre-existing conditions in the U.S. (in particular, an unwillingness to accept them as new policyholders). Consider the pre-ACA system where workers could be rejected from insurance based on such conditions. If a new policy had been introduced that required insurance companies to accept applicants with pre-existing conditions (such as under ACA), but NO OTHER policy changes were introduced at the same time, what would you expect the consequences to have been? If you could design a companion policy to help counteract these consequences, what would it be and how would it help?