1. I have to discuss the relationship between risk and insurance.
2. Determine what ethical concerns health care management/administrator professionals have to contend with resulting from the supply and demand of insurance.
3. Determine whether the income of an individual should not be a consideration for health insurance providers.
4. Determine which factors drive consumer demand for insurance and how management can leverage information obtained from empirical measurements.
5. Recommend an approach that would effectively mitigate the issues associated with measuring the health care demand.
6. Evaluate the relevance of the Lemons Principle: Health Insurance to the current health care system(s) in the United States.

Solution Preview

1. The relationship between risk and insurance is a correlational and incremental form of relationship. This is a correlational relationship due to the fact that the more risk that is involved with insuring an individual due to their health status, the greater the coverage amounts or premiums, as well as the greater the co-pay will usually be. An example of this is that an individual that is an perfect health will usually be much less of a risk for insurance companies, due to the fact that this individual has a much lower chance of developing complications which would require the utilization of insurance coverage.

Individuals that have a great deal of prevailing detrimental health conditions such as diabetes and or kidney disease, will be a much greater risk for insurance companies to cover, due to the fact that due to these health conditions this individual has a much greater chance of developing complications that we require hospitalization and or extended home care. Due to these conditions, this individual will be a much greater risk for insurance companies to cover.

Another key aspect of the relationship between risk and insurance, is the fact that the greater the risk involved in covering an individual………


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