Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 14AP
To determine
The impact of new drug that eliminate the deterioration of health.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Show how a consumer would choose between medical care and health(y) behavior activities using the graphical representation of the consumer choice model (assume that “amounts” of healthy behavior have “costs” or prices). How might health education affect this choice? What if medical care becomes more productive (more health benefit per “unit” of medical care consumed)? What if medical care becomes cheaper? Explain in terms of the model (i.e. what does it change in the model).
Show how a consumer would choose between medical care and health(y) behavior activities using the graphical representation of the consumer choice model (assume that “amounts” of healthy behavior have “costs” or prices).
Assume a consumer's demand for a medical service is as follows:
Q = 100 - Pp
where Pp is the out-of-pocket price she actually faces. She is considering four
different insurance options: uninsurance, full insurance, a 50% coinsurance
plan, and a copayment plan with a $25 copay.
Assume this service has a list price of PL = $70. Calculate Q under each insurance plan.
Please fill in the final answer without showing the middle steps (a number only, without any extra
space, symbol, word, etc.)
If the customer is uninsured, Q=
• If the customer is fully insured, Q=
• If the customer has a 50% coinsurance plan, Q=
• If the customer has the copayment plan, Q=
Knowledge Booster
Similar questions
- A consumer’s demand for a medical service is as follows: Q = 100 – PP where PP is the out-of-pocket price she actually faces. She is considering four different insurance options: uninsurance, full insurance, and a copayment plan with a $25 copay. Assume this service has a list price of PL = $70. Calculate Q under each insurance plan: uninsured , fully insured , 50% coinsurance , and copayment plan Do you observe evidence of moral hazard? (yes or no?)arrow_forwardAn individual has the following utility function: U = Z!/2 H/2, where Z is a composite good and H is the level of health. The individual has income, m = $100. The price of the composite good, Z, is Pz = 1. The price of health, H, is PH = 4. What is the optimal consumption bundle of H and Z that maximizes utility? Show your steps and show the decision graphically (which includes finding the endpoints of the budget constraint).arrow_forwardSuppose there is a new preventative treatment for a common disease. If you take the preventative treatment, it reduces the average amount of time you spend sick by 10%. The optimal combination of Z (home goods) and H (health goods) _____. Suppose there is a new preventative treatment for a common disease. If you take the preventative treatment, it reduces the average amount of time you spend sick by 10%. The optimal combination of Z (home goods) and H (health goods) _____. a. both may decrease b. H may increase; Z may not change c. both may increase or one may stay the same while the other increases. d. Z may increase; H may decrease e. both may increasearrow_forward
- A) Are there differences in the effects of announced and unannounced cigarette tax increases under the theory of rational addiction? Is so, why?arrow_forwardFrustration over US pharmaceutical pricing has led researchers to develop frameworks for evaluation that can be used by any purchaser or patient making complex drug choices. One of the most prominent, the Institute for Clinical and Economic Review, uses clinical trial data and compares value -- per quality adjusted life year (QALY) -- under actual market pricing and other possible references prices for specific drugs. Do you think $/QALY is an appropriate metric for evaluating the value of new drugs?arrow_forwardSuppose 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?arrow_forward
- Indicate whether the statement is true or false, and justify your answer.An hour spent exercising always pays for itself by decreasing the time spent sick by more than an hour.arrow_forwardA recent trend in health insurance is the Health Savings Account (HSA). The idea behind Health Savings Accounts is that rather than providing employees with health insurance that makes visiting doctors cost little more than a simple $10 or $20 copay the employer gives the employee money to use to spend on health care, but the employee bares the entire cost of seeing the doctor. What money given for health care not spent by the employee can be withdrawn by the employee as if it was additional income. It is believed that Health Savings Accounts will reduce the total amount of money spent on seeing doctors. Using Supply and Demand analysis, explain why there is the expectation that HSA’s will reduce spending on doctors.arrow_forwardThe Grossman model emphasizes the important roles that education, health knowledge, and expectations about future income and health play in the choices that determine health in both the short and long runs. Education both increases the likelihood of having higher income, which is good for health, and can compensate for lower income in which of the following ways: a. Education is associated with better health literacy, knowledge and execution of healthy diets and lifestyles b. Education enables people to communicate better with well-educated doctors and so they learn better how to manage their own health over time c. Education enables people to read about side effects and avoid unnecessarily risky procedures d. All of the above e. None of the abovearrow_forward
- Medicare 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_forwardCan you please elaborate on what incoterms are and why they're importantarrow_forwardProblem 2. Congratulations! Upon graduating you accept a well-deserved job with XER Consulting. Your first job involves a consulting gig with a state subcommittee on health care issues. The Senate health care subcommittee is considering the expansion of two existing public health programs. One program concerns additional funding for nursing homes around the state. The other program involves additional funding for community health centers around the state. In both cases the funding is supposed to be used to attract more nurses for expansion purposes. Your job involves the following four tasks: B. Use the production possibilities curve to graphically show and verbally explain how one or both programs could be expanded at a lower opportunity cost if some inefficiency or slack initially exists in the overall public health system. Refer to various points on the graph in your explanation.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
