Question

When firms participate in group health insurance for all employees, it:

A) raises rates for unhealthy people.

B) prevents unhealthy people from "selecting out," to the detriment of healthy people.

C) increases the amount of information available to insurers about the population.

D) may lower rates for all people to the extent that it keeps healthy people in the pool.

E) raises rates for everyone, because it brings unhealthy people into the pool.

Answer 1

In a group insurance policy people, no matter if they are healthy or unhealthy is part of the pool. It allows the insurer to pool its resources form a large number of people and lower the rates.

The answer is "May lower rates for all people to the extent that it keeps healthy people in the pool."