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Which of the following statements accurately describes the relationship between coinsurance rates and moral hazard?

A. Coinsurance rates and moral hazard are independent of each other.
B. Lower coinsurance rates exacerbate moral hazard.
C. Lower coinsurance rates lessen the risk of moral hazard.
D. Higher coinsurance rates exacerbate moral hazard.



Answer :

GinnyAnswer

Final answer:

Coinsurance rates and moral hazard are related as lower coinsurance rates can exacerbate moral hazard by reducing financial responsibility and encouraging risk-taking behavior.


Explanation:

Coinsurance rates refer to the percentage of costs that the policyholder is required to pay after the deductible is met in an insurance plan. Moral hazard is the tendency for individuals to take higher risks when they are insured, as they are protected from the full consequences of their actions. Lower coinsurance rates can exacerbate moral hazard by reducing the financial responsibility of the insured individual, leading to higher risk-taking behavior.


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