Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Question
Chapter 2, Problem 2E
To determine
The acceptability of the given statement.
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Demand studies in health care have provided estimates of both income and price elasticity. Estimates of income elasticity are usually above +1.0. Estimates of price elasticity typically range between -0.1 and -.75 (with hospital services at the lower end and elective services at the upper end).
What information do these estimates convey?
What does the price elasticity of demand estimates imply for government policymakers, insurance companies, and medical providers' decisions?
What does the income elasticity of demand estimates imply for government policymakers, insurance companies, and medical providers' decisions?
Suppose you have two persons, one with more elastic demand for medical care than the other. If they both obtain identical health insurance coverage (or both have their % of costs paid by insurance increased), whose demand will be affected most? Given what you know about relative demand for MC for well vs. ill individuals, more educated vs. less educated persons, and wealthy vs. less wealthy individuals, which of each pair will have the greatest increase in demand under health insurance?
Based on the data presented in the table below estimate elasticity of demand for two price changes: a) price increase from $3 to $9 per hour; and b) price decrease from $9 to $3 per hour. Make sure to use the midpoint formula.
Price Per Hour of Therapy
Demand for Therapy
0
16
1
15
2
14
3
13
4
12
5
11
6
10
7
9
8
8
9
7
10
6
11
5
12
4
13
3
14
2
15
1
16
0
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