Employer-sponsored health insurance Employer-sponsored insurance combats adverse selection by providing a reason for employees to pool together. However,not all members of an employer- sponsored plan are together in a single pool. Example:Consider a firm with four employees,two of whom are young and two of whom are old.The younger employees have lower expected health care costs than the older two.Therefore,this firm would likely use wage pass-through to"charge"older employees more for their health insurance(through forgone wages). Meanwhile,the younger workers pay less,so they are less tempted to leave for other firms. Bhattacharya,Hyde and Tu-HealthEconomicsBhattacharya, Hyde and Tu – Health Economics Employer-sponsored health insurance  Employer-sponsored insurance combats adverse selection by providing a reason for employees to pool together.  However, not all members of an employer￾sponsored plan are together in a single pool.  Example: Consider a firm with four employees, two of whom are young and two of whom are old. The younger employees have lower expected health care costs than the older two. Therefore, this firm would likely use wage pass-through to “charge” older employees more for their health insurance (through forgone wages). Meanwhile, the younger workers pay less, so they are less tempted to leave for other firms