Answered: Indicate whether the statement is true…

Indicate whether the statement is true or false, and justify your answer.Insurance represents a transfer of wealth from healthy states to sick states.

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter7: The Market For Health Insurance

Section: Chapter Questions

Problem 11QAP

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Concept explainers

Moral Hazard

The moral is a person's behavior towards himself /herself, society, organization, and others. Hazard is something that is happening and is not good. A person may be morally good or bad. It depends on his attitude, ethics, integrity, and values. A person may have the highest reverence for money to that for the truth. In this case, the person may lie and it is said that the person is morally bad.

Question

Indicate whether the statement is true or false, and justify your answer.
Insurance represents a transfer of wealth from healthy states to sick states.

Expert Solution

Step 1

Under insurance, people pay the premium is healthy states because it is easy to compensate for income during poor health state.

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Solved in 2 steps

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