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adverse selection

   Also found in: Financial, Wikipedia 0.01 sec.
adverse selection,
n a statistical condition within a group when there is a greater demand for dental services and/or more services necessary than the average expected for that group.

adverse selection
Managed care 1. A stance adopted by health care insurers, which fiercely compete among themselves to insure the healthiest and wealthiest segment of a particular population, and thus adversely select the population which they target for selling insurance policies. See 'Safety net' hospital 2. A health plan, whether indemnity or managed care, is selected over other plans by enrollees who are more likely to file claims and use services, causing an inequitable proportion of enrollees requiring more medical services in that plan


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Employers also are asking for larger group life insurance benefit maximums for their executives, which is causing unbalanced plan design and more adverse selection risk.
The readings are organized under six broad themes: bilateral contracting under asymmetric information and adverse selection; single-agent incentive problems and moral hazard; multilateral asymmetric information and mechanism or auction design; multi-agent incentive problems, moral hazard in teams, and the internal organization of firms; dynamic adverse selection of moral hazard, renegotiation, and relational contracts; and incomplete contracts and the theory of the firm.
While the adverse selection issue could go either way, Alt says she thinks it will become evident fairly quickly, "It won't take long for them to elect or not elect.
 
 
 
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