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Journal of Undergraduate Research

Keywords

health insurance, public policy, adverse selection, employee insurance

College

Family, Home, and Social Sciences

Department

Economics

Abstract

The presence and severity of adverse selection in the market for health insurance has profound implications for public policy. Adverse selection occurs when individuals who are higher risk than observationally equivalent individuals purchase more insurance. Adverse selection can be used to argue in favor of nationalized health care, and at the same time suggests it that regulation simply makes problems worse. Due to the importance of this question, researchers from a wide variety of fields—public health, economics, insurance, law, human resources and medicine, to name a few—have contributed to the literature on adverse selection. Unfortunately, most researchers seldom cross disciplinary boundaries, making it difficult to fully evaluate the evidence for or against adverse selection. Differences across fields in terminology and methodology further hinder the sharing of ideas and results. My paper aims to survey this diverse literature by explaining the differences in terminology, outlining various approaches for testing, and taking a closer look at a selection of papers from a handful of disciplines.

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