Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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There is a consensus among health economists that socioeconomic status (SES) has a
major impact on health, but health does not have a significant effect on SES.
True
False
Explain what the Marshall-Lerner condition represents.
Which of the following results from a process in which the individual can only influence the probability of transitions from one health state to another?
Health promotion
Health status
Health equity
Health disparities
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- While it may seem intuitively obvious that health expenditures will increase as a population ages – older people after all are less healthy on average than younger people in fact, several prominent health economists have argued that it is not aging per se, but rather some of the correlates of an aging population that cause health expenditures to rise as a population ages. For instance, Getzen (1992) argues that, at least in part, rising health expenditures with an aging population are due to the higher incomes and resources of the older population; health care is a normal good, so higher incomes lead to higher expenditures. In a similar manner, Zweifel et al. (1999) argue that the real problem with an aging population, at least as far as health care costs are concerned, is that there will be more people who are within a couple of years of dying. Since health care expenditures rise sharply close to the end of life, it is this, rather than population aging by itself, that leads to higher…arrow_forwardWhile it may seem intuitively obvious that health expenditures will increase as a population age – older people, after all, are less healthy on average than younger people – in fact, several prominent health economists have argued that it is not ageing per se, but rather some of the correlates of an ageing population that cause health expenditures to rise as population ages. For instance, Getzen (1992) argues that, at least in part, rising health expenditures with an ageing population are due to the higher incomes and resources of the older population; health care is a normal good, so higher incomes lead to higher expenditures. In a similar manner, Zweifel et al. (1999) argue that the real problem with an ageing population, at least as far as health care costs are concerned, is that there will be more people who are within a couple of years of dying. Since health care expenditures rise sharply close to the end of life, it is this, rather than population ageing by itself, that leads to…arrow_forwardOne hypothesis for exploring socioeconomic status health disparities is the allostatic load hypothesis. This hypothesis states that repeated (or chronic) stress creates a cumulative physiological burden known as allostatic load. The theory predicts that people on the lower end of the socioeconomic status will have a higher allostatic load, negatively impacting health outcomes.In the context of the Grossman model, we could say that individuals with lower levels of stress face a rate of health depreciation and will have optimal health as a result. lower; higher higher; higher lower; lower higher; lower O Oarrow_forward
- Suppose the proportion P of people affected by a certain disease is described by ln (P/1-P) = 0.1t where t is the time in months. Find dP/dt, the rate at which P grows.arrow_forwardMedicare recipients can purchase supplemental private insurance (known as Medigap insurance) to fill the gap in coverage left by Medicare. This gap includes copayments, deductibles, and prescription drug expenses not covered by Medicare. Several years ago, the government enacted regulations that specify minimum standards for items that Medigap policies must cover. This made the policies more expensive, and as a consequence, about 25 percent of the elderly who would have purchased some Medi-gap insurance purchased none at all [Finkelstein, 2004]. Consider an individual who consumes two goods, "insurance" and "all other goods." The cost of a unit of Medigap insurance is $1, as is the cost of a unit of all other goods. Sketch a budget constraint and set of indifference curves that are consistent with the following scenario: In an unregulated market, an individual with a $30,000 income purchases $5,000 worth of Medigap insurance. The government then puts mandates on Medigap policies that…arrow_forwardThe Grossman model states that health is a capital good that can be carried over from one period to the next. With this in mind, which of the following is most likely true about how the individual will value health in a lifecycle context compared to a one-period model? Individuals tend to value health less in the life cycle context compared to the one period model Individuals tend to value health more in the life cycle context compared to the one period model. not change the emphasis they put on health.arrow_forward
- In the Grossman model of health production, people maximize lifetime utility overconsumption of health (H) and a composite of all other goods (X). In the model, health is a stockthat evolves over time and depends upon health in the previous period (Ht-1), investments inhealth during the previous period (It-1), and a depreciation rate (γ). The level of health in period tis Ht=(1- γ)Ht-1+It-1.a. Consider two individuals with H=50 in the current period. The two individuals areidentical except that individual A is 20 years old and has a γ of 0.1, while individual B is30 years old and has a γ of 0.2. Explain why it is more difficult for individual B tomaintain the same level of health as individual A.b. Give 2 real-world examples of how an increase in education would improve a person’sproductivity of health investment (I).arrow_forwardAn important distinction in health insurance is between the list price (PL) and out-of-pocket price (PP) of a medical good or service. The list price is the official price that the provider charges the insurance company, while the out-of-pocket price is the price that the insurance customer faces. Sometimes, the out-of-pocket price depends on the list price. Now assume the consumer is part of a partial insurance plan with a coinsurance provision. Her insurance pays 50% of all medical expenses. Consider again the relationship between PL and PP and plot a coinsurance plan demand curve in PL - Q space. Label this curve D3. Finally, assume the consumer is part of a partial insurance plan with a copayment provision. Her insurance pays all expenses above and beyond her copayment of $25 for each unit of Q. Consider again the relationship between PL and PP and plot a copayment-plan demand curve in PL - Q space. Label this curve D4.arrow_forwardWhich of the following is the most accurate statement regarding the problem with using life expectancy as a measure of health? Though there used to be a strong relationship between income and life expectancy, these differences have all but disappeared with the spread of modern medicine to even the poorest countries. Increases in life expectancy in both developed and developing countries are driven by improvements in old- age health, so we do not get an accurate picture of child mortality. Life expectancy gives you the average for a country, but overlooks significant differences between groups within countries. Cross country differences in life expectancy at birth are much smaller than differences in life expectancy at age 15 since there are such large differences in old-age health across countries.arrow_forward
- In the framework of the Grossman model, suppose there is an increase in the return in alternate non-health market investments. Draw what happens to the MEC curve and the optimal level of health. Explain intuitively why this might be the case in reality.arrow_forwardWhich theory explains the effect of health on income? Direct income theory Efficient producer theory Productive time theory Allostatic load theoryarrow_forwardThe price elasticity of demand for health care has been estimated to be −0.2. Characterize this demand as price elastic, unit price elastic, or price inelastic. The text argues that the greater the importance of an item in consumer budgets, the greater its elasticity. Health-care costs account for a relatively large share of household budgets. How could the price elasticity of demand for health care be such a small number?arrow_forward
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