Question
In the mid-1990s, the state of New Jersey revised its rules for the individual insurance market and began requiring that insurers charge the same premiums
In the mid-1990s, the state of New Jersey revised its rules for the individual insurance market and began requiring that insurers charge the same premiums for the same coverage to all applicants. Assuming that insurers had previously used medical underwriting, which of the following is a predictable consequence of adverse selection?
Question options:
1)Insurance becomes less attractive to the healthiest individuals, so fewer of them buy it
2)Insurers' average costs of providing coverage increase because of a changing risk pool
3)The average age of those buying in the individual market goes up
4)All of the above
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