Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Question
Chapter 5, Problem 14EQ
a)
To determine
Explain the explanation for prof. Reye’s findings.
b)
To determine
Identify the competitiveness of market in the gynecology base on their longer waiting time and higher fee.
c)
To determine
Explain the discrimination among the male and female gynecologists.
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Demand for medical services is price inelastic (Absolute value of price elasticity of demand is less than 1 and greater than zero). Medical services are different from most other goods and services in that the person who determines the demand (the patient) is not the person who makes the payment (payment is made by the insurance company). How does this affect the price elasticity of demand for medical services (increase it or decrease it)? You may assume that this question only refers to people who have health insurance. Ignore co-payments and deductibles and any other out-of-pocket expenses. Please give an explanation.
In a commentary piece on the rising cost of health insurance, ("Healthy, Wealthy, and Wise," Wall Street Journal, May 4,
2004, A20), economists John Cogan, Glenn Hubbard, and Daniel Kessler state, "Each percentage-point rise in
health-insurance costs increases the number of uninsured by 300,000 people." Assuming that their claim is correct,
demonstrate that the price elasticity of demand for health insurance depends on the number of people who are insured.
What is the price elasticity if 192 million people are insured?
If 192 million people are insured, then the price elasticity of demand for health insurance is (Enter a numeric
response using a real number rounded to three decimal places. Be sure to include the minus sign.)
What is the price elasticity if 247 million people are insured?
(Enter a numeric
If 247 million people are insured, then the price elasticity of demand for health insurance is
response using a real number rounded to three decimal places. Be sure to include the…
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%
b. rise; 0.9%
c. rise; 0.3%
d. fall; 0.9%
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Similar questions
- 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?arrow_forwardNonearrow_forwardHow do fee-for-service and capitation payment systems affect the amount of medical care the patient receives relative to the optimum amount that would be provided by the “perfect” agent? Under which system we expect to see more supplier-induced demand?arrow_forward
- 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?arrow_forwardAll other things equal, if an individual earning $100,000 per year has an income elasticity of demand for health care of 0.4, if her salary increases by 10%, her expenditures on health care will increase by $4,000. True Falsearrow_forwardBriefly discuss the demand and supply factors that contribute to rising health costs. Specify how (a) asymmetric information, (b) fee-for-service payments, (c) defensive medicine, and (d) medical ethics might cause health care costs to risarrow_forward
- Suppose the government imposes a system of price ceilings in the health care industry as part of an overall health care reform bill. a) draw a graph of the health care market and show equilibrium price and quantity. b) assume the government imposes an effective price ceiling in the health care market. Show the price ceiling in your graph. Indicate what will happen to quantity demanded and quantity supplied of health over time ? c) would a shortage or surplus result ? I llustrate in your graph.arrow_forwardWhat are the purpose of individual enterepreneur? What are the few advantage or merits of individual enterepreneur?arrow_forwardSuppose you are collecting data from a country like Japan where the government sets the price of health care. Each prefecture in Japan has a different set of prices (for example, Tokyo has higher prices than rural Hokkaido). Data for 1999 is displayed in Table 2.12. Table 2.12. Outpatient utilization in Tokyo and Hokkaido, 1999. Region Outpatient Visits Price/Visit Tokyo 1.25/month 20 Japenese Yen Hokkaido 1.5/month 10 Japanese Yen What is the arc price elasticity ofdemand for health care consumers in Japan (using only this data)?arrow_forward
- Please answer the following questions thoroughly: Some argue that the price elasticity of demand can be used to determine whether a good or service is a luxury or a necessity. In medical care, a procedure with an elastic demand would be considered optional, or elective, and a procedure with an inelastic demand would be a medical necessity. 1) Should planners use price elasticity of demand as a guide to defining services that are medically necessary? 2) What are the advantages of such a classification scheme? 3) What are the drawbacks?arrow_forwardConsidering Healthcare price elasticity, would it be a good idea to implement a price increase on medical products?arrow_forwardWhile 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_forward
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