Consumers can face higher health insurance premiums when their health gets worse. Mathias Kifmann looked at ways to solve this problem in private health insurance markets. Three main ways were studied: guaranteed renewable contracts, premium insurance, and community rating. Managed care can make the problem worse under guaranteed renewable contracts. An alternative contract was found to be better. Managed care can be used to select only healthy people under community rating. But, it can also benefit everyone if managed care is introduced carefully. Some insurance plans may need to be taxed, and others subsidized, to achieve these benefits.