Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Question
Chapter 3, Problem 18EQ
To determine
The impact of Munchausen’s syndrome on optimal health H* in the light of Grossman model.
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Suppose that a study finds that the price elasticity of demand for MRI's is 0.3 (in absolute value). If the price of care were to ___ by 3%, we would expect the quantity of preventative care consumed to fall by ____%.
Suppose that a study finds that the price elasticity of demand for MRI's is 0.3 (in absolute value). If the price of care were to ___ by 3%, we would expect the quantity of preventative care consumed to fall by ____%.
a. fall; 0.3%
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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…
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=
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