Question

2] Suppose the government of Orwellia decides to genetically test all individuals for the risk of major illness, and reports the results of these tests to potential insurers when people apply for individual health insurance coverage. Will healthy people find working for large firms more, less, or equally attractive than before this testing program began? What about unhealthy peo- ple? Explain.

Answer 1

Healthy people will find it less attractive to work for large firms, because now they can purchase individual health insurance at a cheaper rate as they are healthy. But, joining the big firms, will make them pay higher premium as they have to go for the group health insurance. Hence,  they have to pay more when working for the large organization. So, it becomes less attractive.

In contrast to it, unhealthy people will  find more attractive to work for the large organization, as they will get group health insurance will relatively lower premium than that price what they have to give for individual health insurance. Hence, they will be in benefits if they join the large firms. Hence, it will be more attractive for them.