Final answer:
The question deals with a business offering an incentive for employees to switch to a high-deductible healthcare plan. It relates to the employer mandate for providing insurance and the concept of moral hazard in health insurance consumption.
Step-by-step explanation:
The question centers around an incentive program related to employer-provided health insurance, specifically encouraging employees to choose a high-deductible plan in exchange for a financial bonus. By the terms of the employer mandate, employers with more than 50 employees are required to offer health insurance. Offering a $1,000 bonus to switch may entice employees but also comes with the trade-off of potentially higher out-of-pocket expenses due to the high deductible. This can be seen as an effort to control costs by the employer but may cause employees to consume less healthcare services due to the moral hazard associated with cost sharing. Employees not switching will not only miss out on the bonus but also on a cost-of-living pay increase, which adds further pressure to accept the high-deductible plan after a pay freeze.