insurance is often sold through groups based on place of employment, or, under The Affordable Care Act, from

a state government sponsored health exchange market. From an insurance company’s point of view, selling

insurance through an employer mixes together a group of people—some with high risks of future health

problems and some with lower risks—and thus reduces the insurance firm’s fear of attracting only those who

have high risks. However, many small companies do not provide health insurance to their employees, and

Access for free at openstax.org
16.2 • Insurance and Imperfect Information 399

many lower-paying jobs do not include health insurance. Even after we take into account all U.S. government

programs that provide health insurance for the elderly and people experiencing poverty, approximately 31

million Americans were without health insurance in 2020. While a government-controlled system can avoid
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