Question

HMOs and other health care organizations deliver medical services as _______ _______, a system that reduces the cost of health care.

a) Fee-for-service
b) Bundled payments
c) Capitation
d) Out-of-pocket

Answer 1

Health maintenance organizations (HMOs) reduce healthcare costs through a capitation system, receiving a fixed payment per enrolled person, countering moral hazard and adverse selection in healthcare provision.

Step-by-step explanation:

HMOs and other health care organizations deliver medical services as capitation, a system that reduces the cost of health care. In contrast to the fee-for-service model where providers are paid for each service they deliver, HMOs receive a fixed amount per person enrolled in the plan, regardless of how many services are provided. This approach is designed to minimize the moral hazard problem and adverse selection by providing incentives for healthcare providers to offer efficient care without compromising patient health.