MHA BOST 707 EXAM 3 Questions
with 100% Correct Answers Latest
Version 2026 Top Rated
1. What is moral hazard in healthcare, and how does it manifest?
Answer>> Moral hazard refers to behaving differently (often
riskier or more consumptive) when you know someone else is
bearing the financial risk. In healthcare, this commonly appears
as induced demand — where patients consume more services
than necessary because insurance covers most costs, or
providers recommend more services knowing a third party
(insurer) pays.
Elaboration Without cost-sharing (e.g., deductibles or copays),
patients have little incentive to limit use, leading to overutilization.
Providers may also induce demand by ordering extra
tests/procedures. This contributes to rising healthcare costs.
Mitigation includes copayments, prior authorization, and utilization
review.
2. Whatis adverse selection, and why is it a problem in health
insurance markets?
Answer>> Adverse selection occurs when sicker (higher-risk)
individuals are more likely to purchase insurance, while healthier
people opt out or buy less coverage, leading to a risk pool
dominated by high-cost enrollees.
, Elaboration This creates a "death spiral" — premiums rise to
cover costs → healthier people drop coverage → premiums rise
further. It undermines the pooling of risk (sharing
risk proportionately among many, a basic insurance principle).
Solutions include mandates (e.g., ACA individual mandate),
community rating, and guaranteed issue.
3. Explain asymmetry of information in healthcare and its importance.
Answer>> Asymmetry of information is a gap in knowledge
between parties (primarily physician vs. patient, or patient vs.
insurer/third-party payer). Physicians know far more about
diagnoses, treatments, and necessity than patients.
Elaboration This is critical because it enables supplier-induced
demand (doctors recommending unnecessary care) and makes it
hard for patients to make informed choices or evaluate
quality/price. It contributes to market failure in healthcare, as
patients cannot shop like typical consumers. Importance: Leads
to inefficiencies, higher costs, and potential overuse/underuse of
services.
4. What is non-marketability of risk in healthcare?
Answer>> Non-marketability of risk refers to the inherent difficulty
(or impossibility) of putting a precise market price on many
medical risks, treatments, or outcomes due to uncertainty, ethics,
and the nature of medicine.
Elaboration Unlike insurable risks (e.g., car accidents), medical
risks involve life/death, pain, and unpredictable outcomes that
cannot be fully commodified. This limits pure market solutions and
,explains why healthcare often requires regulation, subsidies, or
public provision.
5. Name and briefly explain the three evaluation criteria for a
healthcare system according to Aday (or common frameworks).
Answer>> The three main criteria are:
-Quality — Effectiveness and safety of care (e.g., low post-
surgical complication rates in an ambulatory surgery center for
cataract patients).
-Equity — Fair distribution of access and outcomes (e.g.,
similar chronic disease mortality rates across
socioeconomic groups or regions).
- Efficiency — Optimal use of resources relative to outcomes
(e.g., low cost and resource use for cataract surgery while
maintaining quality).
Elaboration These criteria help compare systems
nationally/globally. U.S. often excels in quality/innovation but
lags in equity and efficiency compared to many OECD countries.
6. What are managed care organizations (MCOs), and what
distinguishes them? Give an example.
Answer>> Managed care organizations integrate financing and
delivery to control costs and utilization. Their distinguishing
feature is the ability to steer members to preferred providers,
negotiate discounted rates, and manage utilization (e.g.,
gatekeeping, prior authorization).
Elaboration Types include HMOs (staff/group models with
primary care gatekeepers), PPOs (more choice but higher cost-
, sharing for out-of-network), and EPOs. Example: UnitedHealth
Group was the largest MCO in recent years. They contrast with
traditional indemnity insurance by actively intervening in care
decisions.
7. Discuss per household national health expenditures (NHE)
and their relation to median household income.
Answer>> In recent data, per household NHE is around levels
that make healthcare expenditures more than a significant portion
(often >20–25%) of median household income in the U.S.
Elaboration This highlights affordability issues — high spending
crowds out other expenses and contributes to medical debt. It
underscores why cost control is a major policy focus.
.Here’s the continuation of MHA 707 Exam 3 preparation material,
building on the previous sets. This draws from the most consistent
themes across LSUS course resources (e.g., Quizlet study guides
for Exam 3/C, Chapter 6–8 financing and insurance topics,
NHEA/PHC breakdowns, and related concepts). I've added more
frequently tested questions with detailed, elaborated answers to
help you master the material.
These focus on deeper insurance mechanics, financing
structures, NHEA details, managed care evolution, and system
performance issues.
with 100% Correct Answers Latest
Version 2026 Top Rated
1. What is moral hazard in healthcare, and how does it manifest?
Answer>> Moral hazard refers to behaving differently (often
riskier or more consumptive) when you know someone else is
bearing the financial risk. In healthcare, this commonly appears
as induced demand — where patients consume more services
than necessary because insurance covers most costs, or
providers recommend more services knowing a third party
(insurer) pays.
Elaboration Without cost-sharing (e.g., deductibles or copays),
patients have little incentive to limit use, leading to overutilization.
Providers may also induce demand by ordering extra
tests/procedures. This contributes to rising healthcare costs.
Mitigation includes copayments, prior authorization, and utilization
review.
2. Whatis adverse selection, and why is it a problem in health
insurance markets?
Answer>> Adverse selection occurs when sicker (higher-risk)
individuals are more likely to purchase insurance, while healthier
people opt out or buy less coverage, leading to a risk pool
dominated by high-cost enrollees.
, Elaboration This creates a "death spiral" — premiums rise to
cover costs → healthier people drop coverage → premiums rise
further. It undermines the pooling of risk (sharing
risk proportionately among many, a basic insurance principle).
Solutions include mandates (e.g., ACA individual mandate),
community rating, and guaranteed issue.
3. Explain asymmetry of information in healthcare and its importance.
Answer>> Asymmetry of information is a gap in knowledge
between parties (primarily physician vs. patient, or patient vs.
insurer/third-party payer). Physicians know far more about
diagnoses, treatments, and necessity than patients.
Elaboration This is critical because it enables supplier-induced
demand (doctors recommending unnecessary care) and makes it
hard for patients to make informed choices or evaluate
quality/price. It contributes to market failure in healthcare, as
patients cannot shop like typical consumers. Importance: Leads
to inefficiencies, higher costs, and potential overuse/underuse of
services.
4. What is non-marketability of risk in healthcare?
Answer>> Non-marketability of risk refers to the inherent difficulty
(or impossibility) of putting a precise market price on many
medical risks, treatments, or outcomes due to uncertainty, ethics,
and the nature of medicine.
Elaboration Unlike insurable risks (e.g., car accidents), medical
risks involve life/death, pain, and unpredictable outcomes that
cannot be fully commodified. This limits pure market solutions and
,explains why healthcare often requires regulation, subsidies, or
public provision.
5. Name and briefly explain the three evaluation criteria for a
healthcare system according to Aday (or common frameworks).
Answer>> The three main criteria are:
-Quality — Effectiveness and safety of care (e.g., low post-
surgical complication rates in an ambulatory surgery center for
cataract patients).
-Equity — Fair distribution of access and outcomes (e.g.,
similar chronic disease mortality rates across
socioeconomic groups or regions).
- Efficiency — Optimal use of resources relative to outcomes
(e.g., low cost and resource use for cataract surgery while
maintaining quality).
Elaboration These criteria help compare systems
nationally/globally. U.S. often excels in quality/innovation but
lags in equity and efficiency compared to many OECD countries.
6. What are managed care organizations (MCOs), and what
distinguishes them? Give an example.
Answer>> Managed care organizations integrate financing and
delivery to control costs and utilization. Their distinguishing
feature is the ability to steer members to preferred providers,
negotiate discounted rates, and manage utilization (e.g.,
gatekeeping, prior authorization).
Elaboration Types include HMOs (staff/group models with
primary care gatekeepers), PPOs (more choice but higher cost-
, sharing for out-of-network), and EPOs. Example: UnitedHealth
Group was the largest MCO in recent years. They contrast with
traditional indemnity insurance by actively intervening in care
decisions.
7. Discuss per household national health expenditures (NHE)
and their relation to median household income.
Answer>> In recent data, per household NHE is around levels
that make healthcare expenditures more than a significant portion
(often >20–25%) of median household income in the U.S.
Elaboration This highlights affordability issues — high spending
crowds out other expenses and contributes to medical debt. It
underscores why cost control is a major policy focus.
.Here’s the continuation of MHA 707 Exam 3 preparation material,
building on the previous sets. This draws from the most consistent
themes across LSUS course resources (e.g., Quizlet study guides
for Exam 3/C, Chapter 6–8 financing and insurance topics,
NHEA/PHC breakdowns, and related concepts). I've added more
frequently tested questions with detailed, elaborated answers to
help you master the material.
These focus on deeper insurance mechanics, financing
structures, NHEA details, managed care evolution, and system
performance issues.
