Final answer:
An insurance company transacting in a foreign country faces adverse selection, which can be mitigated by categorizing risk groups, influencing the debate on private versus government health insurance in the U.S.
Step-by-step explanation:
An insurance company that is domiciled in one country and transacts insurance in another is dealing with adverse selection and moral hazard. Such a company may opt not to sell insurance without separating buyers into risk groups, to avoid high-risk individuals. The United States is unique, as private firms instead of government mainly provide health insurance, but addressing moral hazard and adverse selection may necessitate government intervention.