CHAPTER 10 – Social Insurance II: Health Care

1. When the average buyer of an insurance policy is likely to have higher risk than others in

his class, this is known as

a) adverse selection.

b) moral hazard.

c) asymmetric information.

d) a HMO.

e) none of the above.

2. There are two forms of health care provided by the government: _________ is provided

for the poor, and _________ is provided for the elderly.

a) HMO; Medicare

b) PMI; HMO

c) Medicaid; Medicare

d) Medicare; Medicaid

e) SSI; Medicare

3. In the year 2000, what was the percentage of GDP that was expended, in total, on health

care?

a) 0.132%

b) 12%

c) 13.2%

d) 19%

e) 22%

4. __________ account(s) for the largest portion of public health expenditure in the United

States.

a) Children’s hospitals

b) Universal health coverage

c) Medicaid

d) Medicare

e) Workers’ compensation

5. Health care markets may be inefficient because of

a) poor information.

b) adverse selection.

c) moral hazard.

d) all of the above.

e) none of the above.