One Method of Reducing the Moral Hazard Problem in Healthcare

question 71

Multiple Choice

One method of reducing the moral hazard problem in healthcare insurance would be to allow insurance companies to

• A) increase the cost for coverage.
• B) agree to cover preventive care completely.
• C) increase the number of doctors eligible for payment.
• D) limit the number of new customers.
• E) require a medical exam before offering coverage.

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Definitions:

Quota

A governmental restriction on the quantity of a specific good that can be imported or exported within a given time frame, used to regulate trade.

Excise Tax

A tax on the production, sale, or consumption of a particular good or service, often levied by the government.

SUVs

Sport Utility Vehicles characterized by their capacity to accommodate more passengers, their off-road capabilities, and higher driving position.

FICA Tax

A United States federal payroll tax imposed on both employees and employers to fund Social Security and Medicare—federal programs that provide benefits for retirees, the disabled, and children of deceased workers.