Question

In: Economics

Consider the concept of moral hazard. Which of the following statements best describe the nature of...

Consider the concept of moral hazard. Which of the following statements best describe the nature of moral hazard in health insurance?

A. After obtaining the health insurance, individuals engage in more careless behavior causing them to get sick
B/. Individuals with health insurance use more health care goods and services than those without health insurance
C. Individuals fill false claims and commit insurance fraud with health insurance
D. A, B, and C are all associated with moral hazard in health insurance

Explain why?

Solutions

Expert Solution

Answer: (D). A, B, and C are all associated with moral hazard in health insurance

Moaln hazards is case in which one party intentionally shows a risky behaviour or fails to behave in a good belif as that party party is aware that the consequences of this will be faced by the other party.

In A case, as the individual knows better that even if that person berson stays carelessly regarding his health but still he could get the insurance cover for the risk associated with his careless behaviour e.g. smoking

In B case, the individuals has certain insurance cover for their health thus they tends to use more and more good and services than those who have not insure for their health.

In C case, if the individual is aware of the benifit from false claiming of insurance than the individual will certainly fill the false claim to commit inssurance fraud with health insurance.

Rahul Sunny answered 2 years ago
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