In 2007, Hawaii began providing universal health care coverage to all children, but the Hawaiian government ended the program in just 7 months. Government officials claimed that most of the children who received government coverage dropped their private insurance to become eligible for the program. As a government official stated, "People who were already able to afford healthcare began to stop paying for it so they could get it for free." In this example, Hawaii's universal health care coverage caused:

Question

Quizplus · Accepted Answer

The correct answer is A) crowding out. This term refers to a situation where private spending or investment is reduced as a result of increased government spending. In this case, the introduction of universal health care led to individuals who could afford private insurance opting for the free government-provided insurance instead, thereby reducing the demand for private insurance.

In 2007, Hawaii Began Providing Universal Health Care Coverage to All