Insurance companies report that these plans lose them money

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It is the second question of the chapter 9 the health care market in the tenth edition of Public Finance by Harvey Rosen

Federal Law allows workers who leave a job to continue to participate in the health insurance they were receiving through their previous employer. However, they have to pay the full monthly premium (including both the employee and employer portions), as well as a 2 percent administrative fee. This high price has led many people, especially the healthier ones , to drop coverage. Insurance companies report that these plans lose them money. Use the concepts developed in this chapter to explain this situation.

Reference no: EM131005375

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