Amanda Starc

Anticompetitive behavior, such as consolidation, in the health-insurance industry has allowed a small group of insurers to dominate the market. One of the main drivers of this behavior is “adverse selection,” where individuals know more about how sick they are than insurance companies do. To mitigate the risk of paying out more claims than they can cover, insurers often raise their premiums. Kellogg’s Amanda Starc and her colleague argue that, to create a truly healthy health-insurance marketplace, regulators and policymakers need a framework for rethinking the complex interactions between adverse selection and regulatory guardrails.