Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Question
Chapter 7, Problem 9E
To determine
Determine whether the given statement is true or false.
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Indicate whether the statement is true or false, and justify your answer.In an actuarially fair insurance contract, the insurance premium equals the probability of sickness times the payout amount.
When a life-long smoker attempts to purchase a life insurance policy
Group of answer choices
the life insurance company faces adverse selection.
the smoker can expect to pay much higher insurance premiums.
a cap on benefits can occur.
all of the above are correct.
none of the above will occur.
Which one is an option for health insurance market
Universal public insurance
Compulsory insurance
Employer-sponsored insurance
All of the above
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Similar questions
- Individuals will prefer to fully insure against a potential adverse event if A. individuals are risk-loving and insurance is priced at an actuarially fair rate. B. individuals are risk-averse and insurance is priced at an actuarially fair rate. C. individuals are risk-loving and insurance is priced above the actuarially fair rate. D. individuals are risk-averse and insurance is priced above the actuarially fair rate.arrow_forwardAdverse selection in insurance business means that those__________ likely to get _________insurance benefits want to purchase insurance the most. Group of answer choices most; large least; small least; large most; small not; anyarrow_forwardInsurance coverage has been shown to diminish the importance of time in the decision about how much medical care to seek and which providers to use. True OR Falsearrow_forward
- In order to remain competitive, insurance companies must successfully address: A. Adverse Selection B. Moral Hazard C. Accurate underwriting (pricing of risk) D. All of the above E. None of the abovearrow_forwardThe size of private health insurance premiums depends on all of the following except prices. expected utilization volume. administrative costs. profit margin. number of carve-outs in a plan.arrow_forwardIndicate whether the statement is true or false, and justify your answer.Insurance represents a transfer of wealth from healthy states to sick states.arrow_forward
- QUESTION 13 The size of the uninsured and underinsured population in the United States has become an indication of the access problems in the US healthcare system.TrueFalse QUESTION 14 If the expected age of death for a male aged 20 is 75, then a 20-year-old man who dies is considered to have lost how many years of life? A. 20 years of life B. 75 years of life C. 55 years of life D. None of these QUESTION 15 Why is survival time considered to be a good indicator of health status? A. It measures health outcomes as compared to costs B. It places an emphasis on the time spent(duration) in a specific health state C. The measure accounts for mortality rates D. It measures outcomes or health state at a given point in timearrow_forwardSuppose that there is asymmetric information in the market for used cars. Sellers know the quality of the car that they are selling, but buyers do not. Buyers know that there is a 30% chance of getting a "lemon", a low quality used car. A high quality used car is worth $30,000, and a low quality used car is worth $15,000. Based on this probability, the most that a buyer would be willing to pay for a used car is $___arrow_forwardDistinguish between adverse selection and moral hazard as they relate to the insurance industry.arrow_forward
- A way to help overcome adverse selection is to ... require a deductible be paid before benefits are received. require all citizens to purchase insurance. subsidize insurance premiums. tax insurance benefit payouts.arrow_forwardThe difference between the actuarily fair price for insurance and the price a risk-averse individual is willing to pay to fully insure is called a-insurance benefit b-risk aversion c-the risk premium d-risk profitarrow_forwardSuppose that the probability of breaking a collar bone is p = .05 and the cost of breaking a collar bone is $1,000. What is the actuarially fair price for insurance against breaking your collarbone?arrow_forward
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