Consider the figure below. Suppose the true price of a health care service is $50. Suppose further that the individual has obtained insurance that has a fixed copayment for this particular service. The copayment is represented by price $30. The social loss from moral hazard is equal to (Quick math tip: You might recall the following: Area of a Triangle base x height) 00000 $50 $30 Price $750 $500 $1000 $30 $300 10 40 = - Quantity

Suppose that there are two countries, Beta and Gamma. Suppose further that everyone in country Beta is on Insurance B and everyone in country Gamma is on Insurance G. Suppose further that both governments use government-set price controls. In 2005, country Beta decided to change the reimbursement rate for pharmaceuticals,  but country Gamma did not make this change. You, a researcher, want to study the effect of offering coverage for this drug had an impact on health expenditures. You have average health expenditures for State Beta and Gamma prior to 2005 and post-2005.  Using your finding from the question above, you can infer that country Beta likely _____ reimbursement rates for pharmaceutical drugs. State Time Periods Pre-2005 Post-2005 State Beta $1000 $1400 State Gamma $1500 $1700 a. lower b. did not change c. raised

Suppose that Hubert, an economist from an AM talk radio program, and Kate, an economist from a school of industrial relations, are arguing over health insurance. The following dialogue shows an excerpt from their debate: Kate: A popular topic for debate among politicians as well as economists is the idea of providing government assistance for health benefits. Hubert: I think it is oppressive for the government to tax people who take care of themselves in order to pay for health insurance for those who are obese. Kate: I disagree. I think government funding of health insurance is useful to ensure basic fairness.   The disagreement between these economists is most likely due to (DIFFERENCE IN SCIENTIFIC JUDGEMENT, DIFFERENCE IN VALUES, DIFFERENCE BETWEEN PERCEPTION VERSUS REALITY)   .   Despite their differences, with which proposition are two economists chosen at random most likely to agree? A. Employers should not be restricted from outsourcing work to foreign nations.…

Demand for medical services is price inelastic (Absolute value of price elasticity of demand is less than 1 and greater than zero). Medical services are different from most other goods and services in that the person who determines the demand (the patient) is not the person who makes the payment (payment is made by the insurance company). How does this affect the price elasticity of demand for medical services (increase it or decrease it)? You may assume that this question only refers to people who have health insurance. Ignore co-payments and deductibles and any other out-of-pocket expenses. Please give an explanation.

Please find the attached question.

3.

The Australian health sector suffers from informational asymmetry problems pertaining to ‘moral hazard’ and ‘adverse selection’. Please provide a reason for why you either agree or disagree with the statement.

If the demand curve is steeper for particular health services the moral hazard is less ? True or false  Explain briefly.

Suppose you have an insurance plan in which you pay the market price for medical care until you meet a deductible of $1,000, after which you have a coinsurance rate of .20. Answer parts a and b assuming your inverse demand curve for medical care is P = 400 – 10Q and the market price for medical care is $200 per unit.a) Graph the price line and your demand curve. On the graph, label the values of the x and y intercepts of the demand curve, the quantity where you meet the deductible, the horizontal sections of the price line, and the point(s) where the demand curve intersects the price line.b) Find the number of units of medical care that you will demand. Show all calculations that youperformed in your analysis.