Problem 3:

a)In class, we discussed 5 policy options for how a national health care system might structure their health insurance market. Define adverse selection in the context of the health insurance market and explain how each of these options addresses the problem of adverse selection (per policy option explain ).

b)Categorize the five options in terms of the option that produces the most amount of adverse selection, the option that produces the least amount of adverse selection, and the options that are in the middle. Explain your answers.

c)Provide one reason why it may not be appropriate to evaluate a nation's health care system by comparing its relationship between health spending and health outcomes to the relationship between health spending and health outcomes in another nation's health care system.