The Coordination of Benefits Provision Reduces the Total Cost of Health

question 11

Multiple Choice

The coordination of benefits provision reduces the total cost of health insurance by over 10 percent by:

• A)discouraging moral hazard.
• B)reducing administrative expenses.
• C)reducing duplicate payments.
• D)reducing payments from the insureds.
• E)limiting adverse selection.

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Definitions:

Marginal Revenue

The additional revenue generated from selling one more unit of a good or service.

Externalities

Economic side effects or consequences that affect uninvolved third parties; can be either positive or negative.

Externality

Actions of one party impose costs or benefits on a second party.

Economy of Scale

The cost advantages that enterprises obtain due to their scale of operation, typically resulting in decreased per-unit cost as production increases.