The country of Cheapland currently has a national health insurance
The country of Cheapland currently has a national health insurance system that reimburses citizens for 90% of all heath care costs incurred. Cheapland’s government is considering a policy change that would provide medical care providers with a fixed reimbursement level for each diagnosed illness so that citizens would no longer bear any out-of-pocket expenses for medical care. In what ways will this policy change reduce moral hazard? In what ways will it increase it?
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