1. What is the lemons problem? Is there a lemons problem with health insurance? Briefly explain.
2. Michael Kinsley, a political columnist, observes: "The idea of insurance is to share the risks of bad outcomes." In what sense does insurance involve sharing risks? How does the problem of adverse selection affect the ability of insurance to provide the benefit of sharing risk?
Source: Michael Kinsley, "Congress on Drugs," Slate, August 1, 2002.