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You are working as a policy advisor for a US senator. The senator has returned from a committee hearing on the insurance industry, and wants

You are working as a policy advisor for a US senator. The senator has returned from a committee hearing on the insurance industry, and wants you to vet some of her colleagues' claims:

1. "Health insurance plans that pay providers on a fee-for-service basis are more likely to cause over-utilization of health care services than are plans that pay providers on a capitated basis." Is this accurate? Briefly explain.

2. "The presence of adverse selection in an insurance market implies that the market is inefficient." Is this accurate? Briefly explain.

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