In the health insurance market,moral hazard occurs when
A) chronically ill people buy insurance.
B) chronically ill people cannot buy insurance.
C) insured people adopt an unhealthy lifestyle.
D) patients sue their doctor.
E) chronically ill people refuse appropriate medical treatment.

Question

Quizplus · Accepted Answer

Moral hazard occurs when insured people adopt an unhealthy lifestyle because they feel protected by their insurance coverage. For example, someone with health insurance may be more likely to engage in risky behavior or eat unhealthy foods because they know their medical costs will be covered. This can contribute to higher healthcare costs for the insurer and ultimately for everyone else who pays into the insurance pool.

In the Health Insurance Market,moral Hazard Occurs When