Exam 11: The Private Health Insurance Industry

_______ occurs when insurance companies structure plans that provide an incentive for healthier consumers to enroll while discouraging enrollment of higher-risk individuals.

_______ occurs when consumers have less incentive to avoid risky behaviors.

Individuals who have access to large-group coverage are _______ likely to fall victim of cherry-picking behavior because the total cost of health insurance is distributed among a _______ number of subscribers.

Which of the following reasons might explain why managed care organizations might be able to lower healthcare costs with premiums similar to fee-for-service plans?

_______ exist when the average total cost of providing insurance coverage decreases as a firm provides coverage for larger groups of people.

Which of the following reasons might explain why health insurance purchased as a group might be less costly than coverage purchased individually?

To maximize profits, a dominant insurance provider will set the price for insurance such that the marginal revenue of providing coverage is _______ of providing coverage.

_______ occurs when high-risk individuals subscribe to an insured group of low-risk individuals.

Scale economies may serve as a barrier to entry in the private health insurance market by mandating a tiered benefit system.

People obtaining health insurance as part of a group are likely to pay higher premiums than those who acquire coverage individually.

_______ is the situation where insured individuals alter their behavior because they are no longer financially responsible for the full cost of their behavior.

Health insurance mandates may result in market inefficiencies if the marginal cost of additional coverage exceeds the marginal benefit received.

Third-party payments provide incentives for the adoption of new technologies that may carry low benefits with high costs.

_______ reasons that firm-size classes with expanding populations are more efficient than those with shrinking populations over time.

An increased HMO presence in insurance markets will likely increase premiums for consumers.