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    Information Asymmetry in Health Insurance

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    What is information asymmetry in health insurance? How would information asymmetry result in a single rate for all persons, even if their expected losses differ?

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    Asymmetric information refers to buyers of health insurance concealing their true health status so that they will be charged lower premiums.

    Some insurers charge higher premiums to people who have medical conditions that might increase the chances that they will need health care. This is known as health status rating (Community Catalyst, 2011).

    Experimental Economics (2006) clearly defines the term:
    "In the ...

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    The solution discusses information asymmetry in health insurance.