CEBS GBA 1 AND 2 ACTUAL EXAM SCRIPT
2026 COMPLETE 200 PLUS QUESTIONS
AND VERIFIED SOLUTIONS
⩥ What are the 4 distinct characteristics of insurance? Answer: 1)
Pooling of losses
2) Payment only for random losses
3) Risk transfer
4) Indemnification
⩥ According to the law of numbers, pooling implies what 2 things?
Answer: 1) The sharing of losses by the entire group
2) The prediction of future losses with some accuracy.
⩥ A __________ loss is one that is unforseen and unexpected and occurs
as a result of chance. Answer: random
⩥ What is the sole exception to the element of risk transfer, assuming
the risk itself rather than an insurance company? Answer: self-insurance
⩥ _____________________ restores the individual to their preexisting
state had the loss not occurred. Answer: indemnification
,⩥ ________________ occurs because individuals and businesses are
more likely to have claims, and more inclined to purchase insurance,
than those who are less likely to have claims.. Answer: Adverse selection
⩥ True or False: Adverse selection, if unchecked, will lead toward more
healthy individuals seeking insurance and lowering premiums.. Answer:
False: Adverse selection, if unchecked, will lead toward more sick
individuals seeking insurance, driving up insurance premiums, and then
even fewer healthy individuals will purchase, continuing the spiral of
higher costs.
⩥ True or False: Adverse selection occurs when individual buyers of
health insurance know more about their health status than do insurers..
Answer: True
⩥ _______________ is the problem faced by insurers because
individuals are more likely to use unneeded health services when they
are not paying the full cost of those services.. Answer: Moral hazard
⩥ What is the primary tool that insurers have to combat the moral hazard
problem?. Answer: Coinsurancce (%) and copayments ($)
⩥ What is the generic term for any outside party, typically an insurance
company or a a government program, which pays for part or all of a
patient's health care services?. Answer: third-party payer
,⩥ What are the two broad categories of health insurers?. Answer: 1)
Private insurers
2) Public programs / insurers
⩥ What are the 3 major private insurers?. Answer: 1) Blue Cross Blue
Shield
2) Commercial insurers
3) Self-insurers
⩥ _________________ Plans originated as a number of separate
insurance programs offered by individual hospitals.
a) Blue Cross
b) Red Cross
c) Blue Shield
d) Red Shield
e) Humana. Answer: a) Blue Cross
⩥ _________________ Plans originated as a number of separate
insurance programs offered by individual physicians.
a) Blue Cross
b) Red Cross
c) Blue Shield
d) Red Shield
, e) Humana. Answer: c) Blue Shield
⩥ What type of health insurance is issued by life insurance companies,
casualty insurance companies, and companies formed exclusively to
offer health care insurance?. Answer: commercial health insurance
⩥ True or False: Commercial insurance companies are taxable (for-
profit) entities.. Answer: True
⩥ True or False: Following World War II, the Internal Revenue Service
ruled that employer-provided health insurance was taxable.. Answer:
False: The IRS ruled that employer-provided health insurance was NOT
taxable, giving employers incentive to offer the tax-free benefit.
⩥ True or False: The US federal government is a major insurer as well
as a direct provider of health care services.. Answer: True
⩥ V.A. benefits, the TRICARE program, HHS, Medicare, and Medicaid
are all examples of:
a) Public programs / insurers
b) Private insurers. Answer: a) Public programs / insurers
⩥ Which program was established by Congress in 1965 primarily to
provide medical benefits to individuals age 65 or older?. Answer:
Medicare
2026 COMPLETE 200 PLUS QUESTIONS
AND VERIFIED SOLUTIONS
⩥ What are the 4 distinct characteristics of insurance? Answer: 1)
Pooling of losses
2) Payment only for random losses
3) Risk transfer
4) Indemnification
⩥ According to the law of numbers, pooling implies what 2 things?
Answer: 1) The sharing of losses by the entire group
2) The prediction of future losses with some accuracy.
⩥ A __________ loss is one that is unforseen and unexpected and occurs
as a result of chance. Answer: random
⩥ What is the sole exception to the element of risk transfer, assuming
the risk itself rather than an insurance company? Answer: self-insurance
⩥ _____________________ restores the individual to their preexisting
state had the loss not occurred. Answer: indemnification
,⩥ ________________ occurs because individuals and businesses are
more likely to have claims, and more inclined to purchase insurance,
than those who are less likely to have claims.. Answer: Adverse selection
⩥ True or False: Adverse selection, if unchecked, will lead toward more
healthy individuals seeking insurance and lowering premiums.. Answer:
False: Adverse selection, if unchecked, will lead toward more sick
individuals seeking insurance, driving up insurance premiums, and then
even fewer healthy individuals will purchase, continuing the spiral of
higher costs.
⩥ True or False: Adverse selection occurs when individual buyers of
health insurance know more about their health status than do insurers..
Answer: True
⩥ _______________ is the problem faced by insurers because
individuals are more likely to use unneeded health services when they
are not paying the full cost of those services.. Answer: Moral hazard
⩥ What is the primary tool that insurers have to combat the moral hazard
problem?. Answer: Coinsurancce (%) and copayments ($)
⩥ What is the generic term for any outside party, typically an insurance
company or a a government program, which pays for part or all of a
patient's health care services?. Answer: third-party payer
,⩥ What are the two broad categories of health insurers?. Answer: 1)
Private insurers
2) Public programs / insurers
⩥ What are the 3 major private insurers?. Answer: 1) Blue Cross Blue
Shield
2) Commercial insurers
3) Self-insurers
⩥ _________________ Plans originated as a number of separate
insurance programs offered by individual hospitals.
a) Blue Cross
b) Red Cross
c) Blue Shield
d) Red Shield
e) Humana. Answer: a) Blue Cross
⩥ _________________ Plans originated as a number of separate
insurance programs offered by individual physicians.
a) Blue Cross
b) Red Cross
c) Blue Shield
d) Red Shield
, e) Humana. Answer: c) Blue Shield
⩥ What type of health insurance is issued by life insurance companies,
casualty insurance companies, and companies formed exclusively to
offer health care insurance?. Answer: commercial health insurance
⩥ True or False: Commercial insurance companies are taxable (for-
profit) entities.. Answer: True
⩥ True or False: Following World War II, the Internal Revenue Service
ruled that employer-provided health insurance was taxable.. Answer:
False: The IRS ruled that employer-provided health insurance was NOT
taxable, giving employers incentive to offer the tax-free benefit.
⩥ True or False: The US federal government is a major insurer as well
as a direct provider of health care services.. Answer: True
⩥ V.A. benefits, the TRICARE program, HHS, Medicare, and Medicaid
are all examples of:
a) Public programs / insurers
b) Private insurers. Answer: a) Public programs / insurers
⩥ Which program was established by Congress in 1965 primarily to
provide medical benefits to individuals age 65 or older?. Answer:
Medicare
