1. The Medicare program is more likely to suffer from adverse selection than the Medicaid program.

For each of the following, answer True or False. If false, very briefly explain why it is false.
1. The Medicare program is more likely to suffer from adverse selection than the Medicaid program.
2. Suppose the state grants Medicaid benefits to a worker only if his income is between $5,000 and $10,000 per year. This will not result in a work disincentive because those who are not working at all cannot receive any benefits.
3. The primary sources of funding for Medicaid are payroll taxes (paid by workers) and premiums, deductibles, and copayments (paid by patients).
4. The primary source of funding for Medicare is from premiums assessed on the elderly population.

Solutions

Expert Solution

Answer 1) TRUE.

Adverse selection in the Medicare program can significantly increase the costs.

Answer 2) FALSE.

The disincentive effect is applied when someone is at the risk of losing Medicaid if they start working more.

Answer 3) FALSE.

Medicaid is funded jointly by states and the federal government that provides low-cost health coverage to millions. It is entirely financed by taxpayers.

Answer 4) FALSE.

Medicare is funded by payroll taxes paid by employees, employers or self-employed.

keosha answered 1 year ago

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