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3. a. Show the effect graphically of a deductible on the demand for medical care. Assume no insurance coverage initially. Then assume there is an insurance policy with a $500 deductible. The price of medical care is $50 per unit. After the deductible is satisfied, the health insurance plan pays for 75 percent of expenses. b. Now assume the policy does not have a deductible but pays 100 percent of expenses up to a stop loss of $2,000. Show this graphically.

3. a. Show the effect graphically of a deductible on the demand for medical care. Assume no insurance coverage initially. Then assume there is an insurance policy with a $500 deductible. The price of medical care is $50 per unit. After the deductible is satisfied, the health insurance plan pays for 75 percent of expenses. b. Now assume the policy does not have a deductible but pays 100 percent of expenses up to a stop loss of $2,000. Show this graphically.

Economics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
ChapterST7: The Economics Of Health Care
Section: Chapter Questions
Problem 1CQ
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3. a. Show the effect graphically of a deductible on the demand for medical care. Assume no insurance coverage initially. Then assume there is an insurance policy with a $500 deductible. The price of medical care is $50 per unit. After the deductible is satisfied, the health insurance plan pays for 75 percent of expenses. b. Now assume the policy does not have a deductible but pays 100 percent of expenses up to a stop loss of $2,000. Show this graphically.
Transcribed Image Text:3. a. Show the effect graphically of a deductible on the demand for medical care. Assume no insurance coverage initially. Then assume there is an insurance policy with a $500 deductible. The price of medical care is $50 per unit. After the deductible is satisfied, the health insurance plan pays for 75 percent of expenses. b. Now assume the policy does not have a deductible but pays 100 percent of expenses up to a stop loss of $2,000. Show this graphically.
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