Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Question
Chapter 3, Problem 5E
To determine
Check whether the statement is true or false.
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Students have asked these similar questions
Indicate whether the statement is true or false, and justify your answer.In the framework of the Grossman model, an individual’s level of health is completely controlled by her actions. Thus, in any given period, an individual is unconstrained in her choice of health status.
Indicate whether the statement is true or false, and justify your answer.In real life, investments in health can generate long-lasting benefits, but the Grossman model neglects this aspect of health.
Suppose that in the fictional country ASU in 2012, a mandate was passed where everyone between the ages of 23-25
will receive health insurance at a discounted rate, while individuals aged 27-29 were not impacted by this policy.
You, a researcher, want to study the effect of offering discounted health insurance coverage on the use of mental
health services. You have data on the average number of visits for these two age groups over time. Using the
information in the table below, a quick difference-in-difference calculation suggests that the mandate led to
Time Periods
Age
group
Avg.
Avg.
Number of Number of
visits
visits
Pre-2012.
Post-2012
23 to 25 2.3
27 to 29 2.5
approximately 0.3 more visits.
approximately 0.7 more visits.
approximately 0.4 fewer visits.
approximately 0.7 fewer visits.
approximately
0.3 fewer
visits.
020202
337
SUCHARY
3.0
2.9
P
1302
126 70 5572
25
20120822
2012
C
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- The Beveridge model in the United Kingdom uses queues or waiting lists to ration care, rather than prices.arrow_forwardConsider that you want to apply the difference-in-differences approach to evaluate the Health Insurance Subsidy Program (HISP). In this scenario, you have two rounds of data on two groups of households: one group that enrolled in the program, and another that did not. You know that you cannot compare the average health expenditures of the two groups because of selection bias, thus you decide to compare change in health expenditures as follows: Table 7.2 Evaluating HISP: Difference-in-Differences Comparison of Means After Before (baseline) (follow-up) Difference Enrolled 7.84 14.49 -6.65 Nonenrolled 22.30 20.79 1.51 Difference DD = -6.65 – 1.51 = -8.16 Note: The table presents mean household health expenditures (in dollars) for enrolled and nonenrolled households, before and after the introduction of HISP. How should you interpret this difference ($USD -8.16)? What are the basic assumptions required to accept this result from difference-in-differences?arrow_forward[A] High-income Canadians tend to choose a higher desired health stock, even though they can afford more healthcare goods. Using the Grossman model, explain why this is the case. Use an appropriate graph to support your answer. [B] Suppose the funding agency switches both physicians' and hospitals' prospective payment to a system of retrospective payment, i.e., from salary to fee-for-service for physicians, and from global budget payment to activity-based funding for hospitals. Clearly explain each of these terms and how these changes will impact the utilization of physician and hospital services.arrow_forward
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- Suppose Jay has been experiencing back pain, and has four options for treatment. (Table 14.6) Plot these four treatments on cost–pain reduction axes. Create a cost-effectiveness frontier by connecting potentially cost-effective treatments. Assume that indifffference curves in this space are linear. Interpret this assumption.arrow_forwardIndicate whether the statement is true or false, and justify your answer.While obesity generally results in higher per-year medical costs, obese individuals do not typically have higher average lifetime medical costs than non-obese individuals because they do not live as long.arrow_forwardOne major premise of the Rothschild–Stiglitz model is that there is a perfectly competitive market for health insurance. Suppose instead that the market is not perfectly competitive, and in fact competitor firms have a hard time entering the market. Could a pooling equilibrium occur in this case? What is it about competition that prevents pooling in the Rothschild–Stiglitz model? No formal proof is necessary, but do make your reasoning clear. Evaluate the following statement: competition in health insurance markets is harmful.arrow_forward
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