Problem
A. What is the definition of moral hazard? How do insurance companies reduce its influence?
B. Discuss the impact of copays and deductibles on demand for health care services for insured individuals
C. What is adverse selection? How do insurance companies minimize its impact on premiums?
D. What is expected value? Using expected value to set premiums, what premium would someone who is risk adverse be willing to pay?
E. Identify at least three factors that impact the demand for health insurance? Provide an example of each factor.
F. What premium would a risk neutral person be willing to pay?
G. Why is health insurance linked to employment (e.g. group insurance) in the United States? Explain.