The Adverse Selection “Death Spiral” Suppose that people can be listed from “most healthy” to “least healthy.” The most healthy never—or rarely—go to the doctor and, on average, cost the insurance firm nothing. The least healthy cost the insurance firm $30,000 every year. Each type of person is equally likely in the population of potential buyers. No matter what price the insurance company charges, the relatively healthy will be the least likely to buy, which drives up the insurance company’s costs and makes selling health insurance unprofitable. Under some strict assumptions, the market for health insurance will fail to exist.