What is Adverse Selection in the health care?

Suppose an insurance company provides health insurance. Then, the people who have higher degree of risk to their health will be more eager to buy the insurance. If only the poor health people buy insurance, then claims will often be made on the insurance company. As a result, the insurance company will suffer huge losses. This problem occurs because insurance company does not have perfect knowledge about the health conditions of its customers. This means that there is problem of adverse selection in the health insurance sector. In such a case, the insurance company would generally like to provide only partial health insurance.