Unlike perfectly competitive markets, health insurance and health care markets are characterized by asymmetric information inmany forms. To see the consequences, consider the following scenario:The population is evenly divided between 2 types of people: healthy people and unhealthy people. Healthy people have expectedhealth care costs of $1000 per year. Unhealthy people have expected health care costs of $5000 per year. Unhealthy people canbecome healthy by working out, eating healthier, and taking preventive care. Assume that the cost of becoming healthy in termsof time and effort is $2000 per year. These people live in a city with one employer who will hire anyone who is willing to work.This employer provides complete health care to all its employees; all health care costs are covered by the insurance.Do the unhealthy employees have an incentive to become healthy?Ο NoO YesO There is not enough information to tell.What is the actuarial fair cost of insurance for all the workers?Actuarially fair cost: $5000Suppose a new employer that pays $1500 more in wages per worker but does not offer any insurance (and there is no marketfor health insurance) enters the market. Which people will go and work for the new employer?The healthyO The unhealthyO NoneO Both groupsWhat would the new actuarially fair cost of insurance be at the original firm?New actuarially fair cost: $

1. No. Becsuse, The only employer in the town is giving the job to everyone irrespective of the…

Ithy by working out, eating healthier, and taking preventive care. Assume that the cost of becoming effort is $2000 per year. These people live in a city with one employer who will hire anyone who is wer provides complete health care to all its employees; all health care costs are covered by the insura healthy employees have an incentive to become healthy? = is not enough information to tell. actuarial fair cost of insurance for all the workers? fair cost: $ 5000 new employer that pays $1500 more in wages per worker but does not offer any insurance (and there insurance) enters the market. Which people will go and work for the new employer? ealthy nhealthy groups the new actuarially fois.

Ithy by working out, eating healthier, and taking preventive care. Assume that the cost of becoming effort is $2000 per year. These people live in a city with one employer who will hire anyone who is wer provides complete health care to all its employees; all health care costs are covered by the insura healthy employees have an incentive to become healthy? = is not enough information to tell. actuarial fair cost of insurance for all the workers? fair cost: $ 5000 new employer that pays $1500 more in wages per worker but does not offer any insurance (and there insurance) enters the market. Which people will go and work for the new employer? ealthy nhealthy groups the new actuarially fois.

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter6: Population Health

Section: Chapter Questions

Problem 9QAP

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The goal of health insurance is to O spread financial risk over a large group of people O equally distribute the probabifity of loss over a large number of people collect sufficient premiums to cover all possible losses O equalize the availability of medical care across population groups O redistribute income from the sick to the healthy
Suppose the government imposes a system of price ceilings in the health care industry as part of an overall health care reform bill. a) draw a graph of the health care market and show equilibrium price and quantity. b) assume the government imposes an effective price ceiling in the health care market. Show the price ceiling in your graph. Indicate what will happen to quantity demanded and quantity supplied of health over time ? c) would a shortage or surplus result ? I llustrate in your graph.
Preventive care is not always cost-effective. Suppose that it costs $100 per person to administer a screening exam for a particular disease. Also suppose that if the screening exam finds the disease, the early detection given by the exam will avert $1,000 of costly future treatment. a. Imagine giving the screening test to 100 people. How much will it cost to give those 100 tests? Imagine a case in which 15 percent of those receiving the screening exam test positive. How much in future costly treatments will be averted? How much is saved by setting up a screening system? b. Imagine that everything is the same as in part a except that now only 5 percent of those receiving the screening exam test positive. In this case, how much in future costly treatments will be averted? How much is lost by setting up a screening system?
discuss the dominant cost components of health care.
Suppose that you graph nations' health expenditures against income and see that the US's point lies below others (like in the stylized figure below). From the graph below, it appears that the US is However, this may not be the case if C Health Switzerland UK US Health expenditures HPF productively efficient; The US has a population that prefers spending their resources on health productively inefficient; The US has a population that prefers spending their resources on health productively efficient; The US has lower levels of inherent health, therefore it has its own HPF which is lower than the others. productively inefficient; The US has lower levels of inherent health, therefore it has its own HPF which is lower than the others.
Suppose, if ill, that Fred’s demand for health services is summarized by the demand curve Q = 50 − 2P , where P is the price of services. How many services does he buy at a price of $20? Suppose that Fred’s probability of illness is 0.25. What is the actuarially fair price of health insurance for Fred with a zero coinsurance rate? If the insurance company pays Fred’s entire loss, will the insurance company offer him insurance at the actuarially fair rate? Why? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
An insured is employed by a manufacturing company that provides group health coverage for its employees and their dependents. If the insured dies, the company must allow theinsured's spouse and children to continue their group heallh coverage for a maximum of how many moriths according to COBRA? 36 B.18 C.12 D.6
improvement in technology usually result in lower cost of production or new and improved consumer goods and services .Assume that an improvement in medical technolgy result in an increase in life expectancy for people 65 years and older . How would this technolgical advance be likely to affect expenditure on health care?
Suppose you are collecting data from a country like Japan where the government sets the price of health care. Each prefecture in Japan has a different set of prices (for example, Tokyo has higher prices than rural Hokkaido). Data for 1999 is displayed in Table 2.12. Table 2.12. Outpatient utilization in Tokyo and Hokkaido, 1999. Region Outpatient Visits Price/Visit Tokyo 1.25/month 20 Japenese Yen Hokkaido 1.5/month 10 Japanese Yen What is the arc price elasticity ofdemand for health care consumers in Japan (using only this data)?
Provide at least five determinants of health at an economic perspective and provide a brief explanation of each determinant.
1. An individual has a health insurance plan with a deductible of $1200 and a coinsurance rate of 50%. Their demand curve is Q=20-(P/10), and the equilibrium market price of medical care is $100 per unit. What quantity of medical care would the individual choose to consume? 2. Suppose that consumers are all risk neutral and so they do not purchase health insurance. The equilibrium price of a doctor visit is $30, the supply of doctor visits is perfectly elastic, and the aggregate demand for doctor visits is given by Q=200-5*P. Calculate the effect that universal perfect health insurance (that is, coinsurance rate=0) would have on social welfare, measured as the sum of consumer surplus plus producer surplus. 3. Consider a version of the Akerlof model in which neither buyers nor sellers observe car quality (though somehow – please suspend your disbelief – both buyers and sellers enjoy higher utility from higher quality cars). For this question, please assume that both buyers…
What provision of federal law makes employer-based health insurance even more attractive to most EMPLOYEES who receive it than just the value of the premium? O Insured employees can take a tax deduction for the entire amount paid to doctors for the employee's treatment even if much of the cost was paid by insurance. Employer-based health insurance offers much better coverage than other types of insurance Employer-based health insurance offers lower copays and deductibles than other types of insurance The value of health insurance paid by an employer is not taxable income for the employee