In Insurance Markets, Moral Hazard Occurs When the Behavior of

question 186

Multiple Choice

In insurance markets, moral hazard occurs when the behavior of

• A) the insured person changes in a way that raises costs for the insurer, since the insured person no longer bears the full costs of that behavior.
• B) the insurer changes in a way that raises costs for the insured person, since the insurer no longer bears the full costs of that behavior.
• C) the insured person changes in a way that eliminates rising health care costs for the insurer, since the insured person no longer bears the full costs of that behavior.
• D) the insured person has an incentive to under consume medical services, simply because the insured person no longer bears the full cost of medical services.

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Definitions:

Medical Harm

Adverse effects or complications that occur as a result of medical treatment or intervention, ranging from minor to severe, and can include medication errors, surgical mistakes, and misdiagnoses.

Sleep

A natural, reversible, periodic state of rest for the mind and body, in which consciousness is altered and sensory activity is reduced.

Repair

The physical and biological process by which tissue damage is fixed or restored.

Circadian Rhythm

A natural, internal cycle that dictates the alternation between sleep and wakefulness, repeating roughly on a 24-hour basis.