2026/2027 MHA 707 Exam C – Questions with
Correct Answers (Updated 2026/2027 Edition)
Question 1
What is "Moral Hazard" in the context of health insurance?
A) The tendency for sicker individuals to seek more insurance than healthy individuals
B) The act of insuring an event increases the likelihood that the event will happen
C) The sharing of risk proportionately among many individuals
D) The inability to purchase insurance due to pre-existing conditions
Answer: B) The act of insuring an event increases the likelihood that the event will
happen
Rationale: Moral hazard refers to individuals behaving differently when they know
someone else is taking the risk (induced demand). In health insurance, having coverage
may lead to increased utilization of services .
Question 2
What is "Adverse Selection" in health insurance?
A) When one party to a transaction takes advantage of knowing more than the other
party
B) When individuals share risk proportionately through insurance
C) When insurance companies refuse to cover pre-existing conditions
D) When the government subsidizes health insurance for low-income individuals
Answer: A) When one party to a transaction takes advantage of knowing more
than the other party
Rationale: Adverse selection occurs when sicker people are more likely to want
insurance compared to those who are healthy. This creates information asymmetry
between insurers and consumers .
,Question 3
What is "Pooling of Risk"?
A) The act of insuring an event increases the likelihood of the event
B) The situation where sicker individuals seek more insurance
C) Allows individuals to share risk, i.e., insurance companies
D) The inability to obtain insurance due to pre-existing conditions
Answer: C) Allows individuals to share risk, i.e., insurance companies
Rationale: Pooling of risk is a basic insurance concept where risk is shared
proportionately among many individuals. This allows insurance companies to spread the
financial risk of health events across a large pool of enrollees .
Question 4
The National Health Expenditure Accounts (NHEA) are published by:
A) Centers for Medicare & Medicaid Services (CMS)
B) Department of Health and Human Services (DHHS)
C) World Health Organization (WHO)
D) National Institutes of Health (NIH)
Answer: B) Department of Health and Human Services (DHHS)
Rationale: The NHEA provides official estimates of health care spending in the US and
is published by DHHS. It measures health care consumption and health care investment .
Question 5
What are the key benefits of the NHEA framework? (Select all that apply)
A) Comprehensive structure
B) Multidimensional analysis
C) Consistent definitions
D) Published annually by the WHO
Answer: A, B, C
,Rationale: The NHEA benefits include: (1) Comprehensive: includes all major
components of health care system in unified, mutually exclusive, and exhaustive
structure; (2) Multidimensional: encompasses expenditures as well as payers; (3)
Consistent: applies a common set of definitions that permits longitudinal comparisons .
Question 6
National Health Expenditures (NHE) include:
A) Only health care consumption expenditures
B) All health care consumption and investments in medical structures, equipment,
noncommercial health services, and biomedical research
C) Only personal health care spending
D) Only government health care spending
Answer: B) All health care consumption and investments in medical structures,
equipment, noncommercial health services, and biomedical research
Rationale: NHE includes all health care consumption and investments in medical
structures and equipment and noncommercial health services and biomedical research.
NHE - HCE = amount of investment in the medical sector of the economy .
Question 7
Health Consumption Expenditures (HCE) is a subset of NHE that includes:
A) Only hospital care spending
B) Personal health care spending, government administration, net cost of private health
insurance, and public health activities
C) Only physician services
D) Only prescription drug spending
Answer: B) Personal health care spending, government administration, net cost of
private health insurance, and public health activities
, Rationale: HCE is a subset of NHE that includes personal health care spending,
government administration and net cost of private health insurance, and public health
activities .
Question 8
Personal Health Care (PHC) is a subset of HCE that includes:
A) All medical goods and services used to diagnose, treat, and prevent health problems
of a specific person
B) Government administration costs
C) Net cost of private health insurance
D) Biomedical research
Answer: A) All medical goods and services used to diagnose, treat, and prevent
health problems of a specific person
Rationale: PHC is a subset of HCE that includes all medical goods and services used to
diagnose, treat, and prevent health problems of a specific person .
Question 9
In 2017, the National Health Expenditures (NHE) were approximately:
A) $1.5 Trillion
B) $2.5 Trillion
C) $3.49 Trillion
D) $5.0 Trillion
Answer: C) $3.49 Trillion
Rationale: In 2017, NHE were approximately $3.49 Trillion, representing 17.9% of GDP,
with a per capita amount of over $10,000 .
Question 10
What percentage of GDP was represented by NHE in 2017?
Correct Answers (Updated 2026/2027 Edition)
Question 1
What is "Moral Hazard" in the context of health insurance?
A) The tendency for sicker individuals to seek more insurance than healthy individuals
B) The act of insuring an event increases the likelihood that the event will happen
C) The sharing of risk proportionately among many individuals
D) The inability to purchase insurance due to pre-existing conditions
Answer: B) The act of insuring an event increases the likelihood that the event will
happen
Rationale: Moral hazard refers to individuals behaving differently when they know
someone else is taking the risk (induced demand). In health insurance, having coverage
may lead to increased utilization of services .
Question 2
What is "Adverse Selection" in health insurance?
A) When one party to a transaction takes advantage of knowing more than the other
party
B) When individuals share risk proportionately through insurance
C) When insurance companies refuse to cover pre-existing conditions
D) When the government subsidizes health insurance for low-income individuals
Answer: A) When one party to a transaction takes advantage of knowing more
than the other party
Rationale: Adverse selection occurs when sicker people are more likely to want
insurance compared to those who are healthy. This creates information asymmetry
between insurers and consumers .
,Question 3
What is "Pooling of Risk"?
A) The act of insuring an event increases the likelihood of the event
B) The situation where sicker individuals seek more insurance
C) Allows individuals to share risk, i.e., insurance companies
D) The inability to obtain insurance due to pre-existing conditions
Answer: C) Allows individuals to share risk, i.e., insurance companies
Rationale: Pooling of risk is a basic insurance concept where risk is shared
proportionately among many individuals. This allows insurance companies to spread the
financial risk of health events across a large pool of enrollees .
Question 4
The National Health Expenditure Accounts (NHEA) are published by:
A) Centers for Medicare & Medicaid Services (CMS)
B) Department of Health and Human Services (DHHS)
C) World Health Organization (WHO)
D) National Institutes of Health (NIH)
Answer: B) Department of Health and Human Services (DHHS)
Rationale: The NHEA provides official estimates of health care spending in the US and
is published by DHHS. It measures health care consumption and health care investment .
Question 5
What are the key benefits of the NHEA framework? (Select all that apply)
A) Comprehensive structure
B) Multidimensional analysis
C) Consistent definitions
D) Published annually by the WHO
Answer: A, B, C
,Rationale: The NHEA benefits include: (1) Comprehensive: includes all major
components of health care system in unified, mutually exclusive, and exhaustive
structure; (2) Multidimensional: encompasses expenditures as well as payers; (3)
Consistent: applies a common set of definitions that permits longitudinal comparisons .
Question 6
National Health Expenditures (NHE) include:
A) Only health care consumption expenditures
B) All health care consumption and investments in medical structures, equipment,
noncommercial health services, and biomedical research
C) Only personal health care spending
D) Only government health care spending
Answer: B) All health care consumption and investments in medical structures,
equipment, noncommercial health services, and biomedical research
Rationale: NHE includes all health care consumption and investments in medical
structures and equipment and noncommercial health services and biomedical research.
NHE - HCE = amount of investment in the medical sector of the economy .
Question 7
Health Consumption Expenditures (HCE) is a subset of NHE that includes:
A) Only hospital care spending
B) Personal health care spending, government administration, net cost of private health
insurance, and public health activities
C) Only physician services
D) Only prescription drug spending
Answer: B) Personal health care spending, government administration, net cost of
private health insurance, and public health activities
, Rationale: HCE is a subset of NHE that includes personal health care spending,
government administration and net cost of private health insurance, and public health
activities .
Question 8
Personal Health Care (PHC) is a subset of HCE that includes:
A) All medical goods and services used to diagnose, treat, and prevent health problems
of a specific person
B) Government administration costs
C) Net cost of private health insurance
D) Biomedical research
Answer: A) All medical goods and services used to diagnose, treat, and prevent
health problems of a specific person
Rationale: PHC is a subset of HCE that includes all medical goods and services used to
diagnose, treat, and prevent health problems of a specific person .
Question 9
In 2017, the National Health Expenditures (NHE) were approximately:
A) $1.5 Trillion
B) $2.5 Trillion
C) $3.49 Trillion
D) $5.0 Trillion
Answer: C) $3.49 Trillion
Rationale: In 2017, NHE were approximately $3.49 Trillion, representing 17.9% of GDP,
with a per capita amount of over $10,000 .
Question 10
What percentage of GDP was represented by NHE in 2017?
