Final answer:
A Health Maintenance Organization (HMO) is a system that monitors and controls health care providers' decisions, offering a different reimbursement method than fee-for-service systems. The ACA further regulates healthcare costs with caps on administrative expenses and requirements for EMRs. The adverse selection represents a significant challenge in insurance markets due to risk information asymmetry.
Step-by-step explanation:
is any system of cost containment that closely monitors and controls healthcare providers' decisions about medical procedures, diagnostic tests, and other services that should be provided to patients is known as a Health Maintenance Organization (HMO). In the context of the fee-for-service health financing system, providers receive payment based on the services they perform, whereas HMOs reimburse providers based on patient numbers, with resource allocation responsibility falling to the providers themselves. This alternative healthcare model includes the advent of the Affordable Care Act (ACA), which introduced measures like caps on administrative spending and mandatory adoption of Electronic Medical Records (EMRs) to increase efficiency and cost control. Additionally, insurance markets face a challenge known as adverse selection, where the asymmetry of risk information between buyers and insurers can lead to an imbalance in the insurance landscape.