Starting in 2008, Medicare would not cover the cost of a surgeon leaving an inst

Question

Starting in 2008, Medicare would not cover the cost of a surgeon leaving an instrument in a patient, giving a patient transfusions of the wrong blood type, certain types of hospital-acquired infections, or other "preventable" mistakes (Liz Marlantes, "Medicare Won't Cover Hospital Mistakes: New Rules Aimed at Promoting Better Hospital Care and Safety," ABC News, August 19, 2007). Hospitals will have to cover these costs and cannot bill the patient. These changes are designed to provide hospitals with a stronger incentive to prevent those mistakes, particularly infections. The Centers for Disease Control and Prevention estimates that 2 million patients are annually infected in hospitals, costing society more than $27 billion. Nearly 100,000 of those infections are fatal. Many of these infections could be prevented if hospitals more rigorously follow basic infection control procedures, including having doctors and nurses wash their hands between every patient. Is Medicare's policy designed to deal with adverse selection or moral hazard? Is it likely to help? Explain Medicare's policy is designed to deal with 0 A. moral hazard because hospitals don't try as hard to correct errors when they don't bear the costs of those mistakes O B. moral hazard because hospitals know more about the quality of their care than patients ( C. adverse selection because both hospitals and patients know about the quality of hospital care 0 D. moral hazard because patients bear the consequences of hospital errors in the form of compromised health E. adverse selection because hospitals with more errors attract unusually sick patients

Explanation / Answer

A. Moral hazard because hospitals don't...

Reason

Moral hazard is a situation in which one party gets involved in a risky event knowing that it is protected against the risk and the other party will incur the cost. Here, the negligence errors committed by hospitals should be paid by the hospitals, otherwise they will not get any incentive not to commit such an error.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.