Table 3.

Four types of actions that in the case of imperfect risk equalization and premium rate restrictions can be qualified as risk selection

	Actions with the goal	Actions with the effect
Actions by insurers	Type-1 action Example: being non-responsive (e.g., via benefit design) to the preferences of unhealthy people with the goal to keep these people away from the health plan	Type-2 action Example: improving the quality of care for unhealthy people with the side-effect that the insurer attracts a disproportionally large number of these people
Actions by consumers	Type-3 action Example: healthy consumers choose a limited provider plan with a low premium with the goal to avoid paying a higher premium that contains (more) cross-subsidies to the unhealthy consumers (market segmentation)	Type-4 action Example: unhealthy consumers choose high-cost, high-quality plans more often than the healthy, with the effect that these groups end up in different pools with different premiums (market segmentation)

Healthy consumers are assumed to be overcompensated and unhealthy are assumed to be undercompensated