Question

1. What would be the consequence for insurance companies allowing patients as many treatments as they want?

Group of answer choices

The moral hazard problem would become more severe.

The principal-agent problem would become less severe.

The adverse selection problem would become more severe.

The moral hazard problem would become less severe.

The adverse selection problem would become less severe.

2. What would be the consequence for patients of a law that limited the amount of annual profit a health insurance company could earn?

Group of answer choices

The adverse selection problem would become less severe.

The moral hazard problem would become more severe.

The moral hazard problem would become less severe.

The adverse selection problem would become more severe.

The principal-agent problem would become less severe.

3. The cost level of providing health care is due to the ________ of incentives that exist for consumers, producers, and intermediaries.

Group of answer choices

asymmetry

conflict

symbiosis

division

harmony

Answer 1

1. Option A.

• When insurance companies allow patients as many treatments they want, the moral hazard problem would become more severe.
• In healthcare, moral hazard usually occurs when patient's try to take maximum benefit by accessing additional heath care when he/she gets insured.
• If the insurance companies are itself allowing patient's to access healthcare frequently for as many treatments they want, then patients would visit health centres more frequently even for small disecases like common cold.
• Hence, this would make the moral hazard problem more severe.