Reasons for the creation of adverse selection in health insurance

Hello kisses, it's my honor to answer your question~? Why does adverse selection occur in the health insurance market? Because adverse selection arises from asymmetric a priori information. Due to imperfect information, all consumers of an insurance company face the same probability of disease risk and premiums are calculated based on average expected loss and average risk. In fact, different consumers face different disease risks and expected losses. In this case, high-risk people will be willing to buy insurance because premiums based on average risk are lower than premiums based on high risk.