(Solved):How does moral hazard affect health insurance? View Answer…

 

Question

How does moral hazard affect health insurance?

 

EXPERT ANSWER

Moral hazard applies to extra health insurance received when individuals are protected. Insurance charges for protection when individuals are covered. Insurance reduces the cost of treatment to null. If the cost is therefore lowered, buyers demand additional health coverage than they might have done at regular market rates, leads to moral hazard.

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