In the Health Insurance Context, Moral Hazard Occurs When Patients

question 13

True/False

In the health insurance context, moral hazard occurs when patients make less healthy choices and doctors provide treatments that have little medical benefit because they know the costs will be covered by insurance.

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Definitions:

Production Cost

The direct and indirect expenses incurred to manufacture goods or provide services.

Equivalent Units

A concept in cost accounting used to denote the amount of work done on incomplete units, expressed in terms of fully completed units.

Physical Units

A measure of production output or inventory in terms of the actual number of units, as opposed to the cost or value of the units.

Percentage of Completion

A method of accounting for long-term contracts in which income is recognized as a proportion of work completed at certain stages.