The Adverse Selection Death Spiral Occurs When Private Insurance Companies

Multiple Choice

The adverse selection death spiral occurs when private insurance companies:

A) charge higher-than-average prices for health insurance, which in turn drives off healthy individuals and leaves only sicker, high-cost individuals, resulting in yet higher premiums the following period.
B) find themselves with only healthy individuals to insure.
C) offer health insurance at average cost, which results in losses to the company.
D) refuse to insure very sick individuals.