Final answer:
The FALSE statement about Moral Hazard is that it can only exist in the private health insurance market. Moral hazard can affect behavior in any insurance system, private or public, whenever individuals don't bear the full consequences of their actions.
Step-by-step explanation:
The statement that is FALSE about Moral Hazard is (e) It can only exist in the private health insurance market. Moral hazard occurs when individuals or organizations do not bear the full consequences of their actions, and thus may behave less carefully than they otherwise would, leading to suboptimal outcomes. This can apply to various types of insurance beyond health insurance, and is not restricted to the private sector. For instance, moral hazard can influence behavior in publicly funded healthcare systems through actions like patients seeking unnecessary medical care because they are not directly bearing the costs.
Moral hazard can indeed lead to higher healthcare prices due to increased demand for services when individuals are not paying the full price. Not only patients, but doctors can also exhibit behaviors indicative of moral hazard, especially when they benefit from providing more treatments or services. Additionally, moral hazard can exist even when there is only one acceptable test or treatment, simply because the insured party is shielded from the full financial impact of that service. A clear example of actions taken to address moral hazard in healthcare is the shift from fee-for-service models to health maintenance organizations (HMOs), where providers receive a fixed amount and thus have an incentive to limit unnecessary care.