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3. True or False. Cost-sharing is used to combat moral hazard at the expense of equity....

3. True or False. Cost-sharing is used to combat moral hazard at the expense of equity. Be sure to justify your answer.

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Answer #1

TRUE

reason:

Moral hazard refers to a situation where the insured  individuals behave differently than they would without the insurance, i.e., if they were fully exposed to the risk.

Cost-sharing like copayment can help combat moral hazard by making them more responsible for their actions. These individuals now take precautions and preventive measures not to fall ill due to careless behavior because they also bear a part of the expenditure now.

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