What is the term used to describe the practice of excluding members who are sicker than the general population?

The practice of excluding members who are sicker than the general population is referred to as adverse selection. This term describes a situation in health insurance where insurers attempt to avoid enrolling individuals who are likely to require more medical care than average. When health insurers engage in adverse selection, they can face a higher risk of covering a pool of enrollees that are less healthy, leading to increased costs and potential financial loss.

Insurers may use various strategies to mitigate adverse selection, such as implementing strict underwriting practices or excluding coverage for pre-existing conditions. This practice is critical to maintaining a balanced risk pool that allows insurers to manage costs effectively and offer affordable premiums to their members.

Understanding adverse selection is important in health insurance, as it affects how policies are formulated, pricing is structured, and the overall accessibility of care for different demographic groups.