00:04
Part a, the policy that would worsen the adverse selection problem is the one stating that insurance companies must offer health insurance to everyone who applies and charge them the same price regardless of a person's pre -existing health condition.
01:41
This is because the insurance companies would have no choice but accept even applicants who are leaving.
01:48
Under or living under very risky conditions in terms of health.
02:17
Without that sort of fear of being denied health insurance, there's no incentive to motivate some individuals to live a better lifestyle.
02:25
So this means that insurance companies would be exposed to more risk.
02:50
Part b, the policy discussed was included to solve the situation of having patients with acute diseases and very risky conditions being denied the chance of securing health insurance.
04:09
Before the act, most of the patients who were suffering from very risky diseases were denied the insurance or were even charged more than normal conditions.
04:18
Therefore, the policy was introduced to bring about a quality in the health insurance sector.
04:40
And this was really important because it's important to remember that not all preexisting conditions, in fact, a lot of preexisting conditions aren't due to a patient's lifestyle...