1. People buy insurance

because they are risk averse.

to defer consumption.

because of externalities.

to maximize their welfare.

2. One result of asymmetric information in health insurance markets is

an optimal number of insurance policies sold.

adverse selection.

externalities in consumption.

a low marginal benefit of additional information for the buyer of insurance.

3. The highest incidence of those without health insurance occurs in which age category?

Under 18 years of age.

18-34 years of age.

35-44 years of age.

45-64 years of age.

Over 65 years of age.

4. Many individuals without health insurance receive “free” care. What are the sources of most of the care they receive?

Public hospitals and clinics.

Private, not-for-profit hospitals.

Private, for-profit hospitals.

Multi-specialty physicians’ practices.

Solo practitioners and their associates.

5. A major factor contributing to the growth in employee-based health insurance in the United States has been

greater than average economic growth leading to increased demand for labor.

the tax free treatment of health insurance as an employee benefit.

legislation requiring all firms to provide health insurance to all full-time workers.

the long standing tradition in the United States of providing a generous package of benefits to all workers.

6. A group of 100 people seek out an insurance company to underwrite health insurance for its members. If expected medical spending for the group is $150,000, what will the average premium be if the health insurance company estimates the premium adding net loading costs of 20 percent?

$1,200

$1,500

$1,800

$3,000