Sicker patients avoid tightly managed health plans

Evidence of adverse selection in health plans

...sicker individuals less likely to enroll in the tightly managed plan and the high-deductible consumer-driven health plan. This is a significant finding, as empirical evidence of adverse selection, beyond that measured by observable factors, is rare.

Health plans are not allowed to price according to customer risk characteristics, so they offer different kinds of plans, designed to attract different kinds of customers instead.