Asked by michelle hopkins on Apr 27, 2024
Verified
Health insurance policies include deductibles:
A) to minimize moral hazard.
B) because,when it comes to health,most people are risk-averse.
C) to minimize adverse selection.
D) because many health insurance companies own hospitals.
Deductibles
The amount a policyholder must pay out-of-pocket before an insurance company will cover the remaining costs of a claim.
Moral Hazard
A situation where one party is more likely to take risks because the negative consequences of the risk are borne by another party.
Health Insurance
A type of insurance coverage that pays for medical and surgical expenses incurred by the insured, often providing a hedge against financial risks arising from healthcare costs.
- Comprehend the notion of moral hazard and its impact on personal and corporate decision-making.
- Comprehend the application of deductibles, co-pays, and premiums in insurance for risk management.
Verified Answer
LA
Layfon AlsiefMay 01, 2024
Final Answer :
A
Explanation :
Deductibles are included in health insurance policies to minimize moral hazard, which is the possibility of insured individuals engaging in riskier behavior because they know their insurance will cover the resulting costs. By requiring individuals to pay a certain amount before the insurance coverage kicks in, deductibles minimize the incentive to engage in risky behavior.
Learning Objectives
- Comprehend the notion of moral hazard and its impact on personal and corporate decision-making.
- Comprehend the application of deductibles, co-pays, and premiums in insurance for risk management.