Generation Health simplifies the selection of genetic tests for physicians, it helps explain the test and its results to patients, it safeguards data, and it drives a hard bargain with testing centers through its ability to direct large volumes of tests their way.

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Perhaps the most famous and common application of adverse selection theory is in health insurance.

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Organizations seeking to expand health coverage were quick to praise the selection.

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Adverse selection also works on a smaller scale than health care reform.

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In hiring mental health professionals, there is some assumption of pre-selection.

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"It's adverse selection, " says David McSweeney, whose company Health Care Data Management audits big company plans.

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These kinds of adverse-selection effects crop up at the company level in health insurance, too.

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Price-sensitive health services might also be interested in bundled deals for the broad selection of cancer and cardiovascular pills that Roche now controls.

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Because the competition has concentrated on risk selection, it has not had the desired bracing effect on medical providers, so health spending has kept on growing.

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