Final answer:
To mitigate adverse selection in the health care market, the government can implement subsidies such as those under the Patient Protection and Affordable Care Act, which also includes mandates to broaden the risk pool and prevent denial based on preexisting conditions.
The correct answer is options C
Step-by-step explanation:
The government can address the problem of adverse selection in the health care market in several ways. One effective strategy is to implement subsidies for health insurance. For example, under the Patient Protection and Affordable Care Act (ACA), the approach of providing health insurance through employer groups or government-sponsored health exchanges helps to mix high-risk and low-risk individuals, thereby reducing the fear for insurance companies of only attracting high-risk individuals.
Moreover, the ACA prevents insurers from denying coverage on the basis of preexisting conditions and mandates that all Americans have health insurance, which further counteracts adverse selection by broadening the risk pool.