CH 18: Health Insurance and Health Care

Question 1

adverse selection

Answer 1

when one party has info about some aspect of product quality that the other party does not have. p572

Question 2

asymmetric information

Answer 2

an imbalance in information that occurs when one party knows more than the other p571

Question 3

Coinsurance payment

Answer 3

a % of costs that the insured must pay after exceeding the insurance deductible up to the policy’s contribution limit. p569

Question 4

deductables

Answer 4

a fixed amounts that the insured must pay before most of the policy’s benefit can be applied. p569

Question 5

moral hazard

Answer 5

lack of incentives to guard against risk where one is protected from its consequences p573

Question 6

principle-agent problem

Answer 6

when a principal entrusts an agent to complete a task and the agent doesn’t do so in a satisfactory way. p572

Question 7

single-payer system

Answer 7

the government covers the cost of providing most health care and the people pay their share through taxes p581