Answered: This is a Microeconomics problem.…

This is a Microeconomics problem. Explain how adverse selection can cause undesirable outcomes in a health insurance industry over time.

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter9: The Physicians’ Services Market

Section: Chapter Questions

Problem 5QAP

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Concept explainers

Moral Hazard

The moral is a person's behavior towards himself /herself, society, organization, and others. Hazard is something that is happening and is not good. A person may be morally good or bad. It depends on his attitude, ethics, integrity, and values. A person may have the highest reverence for money to that for the truth. In this case, the person may lie and it is said that the person is morally bad.

Question

This is a Microeconomics problem.

Explain how adverse selection can cause undesirable outcomes in a health insurance industry over time.

Study of decisions made by households and business firms at an individual level. It includes several laws and theorems related to demand, supply, production, allocation of resources, and prices.

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While the individual mandate clause in the Affordable Care Act (also known as, Obamacare) was still in effect, which market failure in the market for health insurance did it help to reduce? Group of answer choices A.) Increasing Returns to Scale. B.) Moral Hazard. C.) Adverse Selection. D.) Barriers to Entry. E.) Externalities.
Identify each of the following as an adverse selection or a moral hazard problema. A person with car insurance fails to lock his car doors when he shops at a mall.b. A person with a family history of cancer purchases the most complete health coverage available.c. A person with health insurance takes more risks on the ski slopes of Aspen than he would without health insurance.d. A college professor receives tenure (assurance of permanent employment) from her employer.e. A patient pays his surgeon before she performs the surgery.
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Describe the challenges that adverseselection and moral hazard pose for insurance.
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