Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Question
Chapter 5, Problem 6E
To determine
The method of paying the doctor and the care provided.
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What factors cause Physician Induced Demand, and how do you diagnose it?
For every 10 percent increase in price of health care services, demand falls by 3 percent. How much is the own price elasticity of demand for health care?
0.3
3.33
-3.33
-0.3
Sources of data for Market failure in health.
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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?arrow_forwardThe price elasticity of demand for health care has been estimated to be −0.2. Characterize this demand as price elastic, unit price elastic, or price inelastic. The text argues that the greater the importance of an item in consumer budgets, the greater its elasticity. Health-care costs account for a relatively large share of household budgets. How could the price elasticity of demand for health care be such a small number?arrow_forwardWhich option is not true on the price of health care? In general it does not affect ones health It might have some impact on high risk individuals It affects healthy people It has some impact on low-income individualsarrow_forward
- Which method(s) of payment to physicians will most likely result in higher total charges due to volume of services provided? Capitation. Salary. Fee-for-service (FFS). RBRVs. Methods based on patient outcomes.arrow_forwardEven though the total cost of an uninsured hospital stay is lower, why would an uninsured person actually end up paying more than those with insurance?arrow_forwardOne of the significant problems in medical care markets may be the information problem. Asymmetric information has led to two important defects in the medical marketplace. What are they? How do these defects affect medical markets?arrow_forward
- Demand falls by 5 percent for every 10 percent increase in price health care services. How much is the won price elasticity of demand for health care?arrow_forwardExplain the factors that may cause shortages of physicians in rural areas. Explain what types of policies might encourage physicians to move to rural areas and reduce the shortage.arrow_forwardPayments for the same services differ greatly between Medicaid and private insurers. Explain whether differences in payments should lead to differences in access to services and the quality of care received.arrow_forward
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