adverse selection


Also found in: Dictionary, Thesaurus, Legal, Financial, Encyclopedia, Wikipedia.

Adverse Selection

Clinical genetics An event in which an insurer avoids underwriting a person whose genetic profile indicates a high chance of suffering an "expensive" condition in the future—e.g., Huntington’s disease (Armed with such information, an insurance carrier may deny coverage—i.e., adversely select—a person with a high risk of suffering the disease in question; alternatively, that person may take out a large insurance policy on standard terms).
Health insurance The tendency of those with greater-than-average health risks to apply for, or maintain, insurance coverage.
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.
(2) The selection of a health plan, whether indemnity or managed care, over other plans by those enrollees who are more likely to file claims and use services, causing an inequitable proportion of enrollees requiring more medical services in that plan.

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.

adverse selection

The enrollment in a health plan of those who are sicker or use more health care services than the general population.
See also: selection

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.
Mentioned in ?
References in periodicals archive ?
In the presence of adverse selection, the average covered individual is riskier than the marginal one, thus leading to prices that are too high and to the familiar result of under-insurance.
The concept of adverse selection argues that individuals who are at high health risk are more likely to purchase health insurance than those who are considered at low risk.
At the same time, the PIN and the adverse selection of the spread ([theta]) average 25.
The end result is a competitive advantage over companies that ignore the potential benefits of strategizing to account for adverse selection.
The model shows that uncertainty about whether a good will be sold partially solves the hidden action problem, in which owners underprovide effort and lessen the effect of adverse selection on markets.
The VC market offers an interesting forum for empirically examining the relation between adverse selection and forms of finance.
In the end, in the absence of any antidotes to this adverse-selection problem, the market unravels completely, just like the high-quality product in the example in the initial discussion of adverse selection, (18) and there are no share offerings to portfolio investors.
The researchers sought to isolate the relative significance of adverse selection and moral hazard in accounting for differences in their expenditures.
Incentive contracts are considered to be an effective mechanism to reduce the adverse selection problem of fund managers.
Adverse Selection and Death Spirals: The NCLB, ACA, and School Voucher Opposition Conclusion
CHIP, adverse selection, health insurance, children
These claims imperfectly address whether there was adverse selection by focusing simply on coverage demographics.