Final answer:
The correct answer is B) New members of a group do not need to fill out an application. Blanket health insurance covers a group automatically without individual applications, negating issues like adverse selection.
Step-by-step explanation:
The correct statement regarding blanket health insurance is B) New members of a group do not need to fill out an application. Blanket health insurance is a type of insurance coverage that offers protection to a group of individuals, such as employees at a workplace, members of an organization, or participants in an event, without requiring individual applications. It is designed to cover all individuals in the group automatically upon their membership or participation.
This is in contrast with requiring individual applications or underwriting for each member, which is common in personal health insurance policies. In the context of government interventions in insurance markets, such as the requirement for car owners to have auto insurance, these interventions are designed to ensure that people with low risks don't avoid buying insurance, which would otherwise lead to adverse selection issues for insurance companies.