The graphs show welfare given equilibrium prices $Pe$ and implied consumer sorting between $H$⁠, $L$⁠, and uninsured. Panel a shows the case where the $L$ plan is a pure cream skimmer (⁠$ΔCHL=CH(s)-CL(s)=0$⁠), while panel b shows the case where $L$ has a causal cost advantage (⁠$ΔCHL>0$⁠). The market surplus is shaded (light); the loss due to intensive margin misallocation (between $H$ and $L$⁠) is shaded (dark); and the loss due to extensive margin misallocation (between $L$ and $U$⁠) is shaded in thatched (darkest).