Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Chapter 6, Problem 9E
To determine
Check whether the statement is true or false.
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Students have asked these similar questions
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?
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…
In some countries, such as Canada and UK, direct-to-consumer (DTC) advertising for
pharmaceutical products is illegal or tightly controlled. Which of the following is NOT
a reason why DTC is tightly controlled?
DTC have the potential to drive up spending on drugs and exacerbate moral
hazard.
DTC makes patients aware of new remedies.
DTC can put a strain on doctor-patient relationship when patients demand some
drugs that are not necessary or not the best options.
Asymmetric information: consumers are not in a good position to determine if a
drug is what they need.
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Similar questions
- Indicate whether the statement is true or false, and justify your answer.In the RAND HIE, the arc elasticity of demand for inpatient care was larger (in absolute value) than the arc elasticity of demand for outpatient care.arrow_forwardIndicate whether the statement is true or false, and justify your answer. Unlike with most types of goods, deriving a demand curve for health care is quite simple because people rarely skimp on health care.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
- Indicate whether the statement is true or false, and justify your answer.Compared with doctors who are paid on a fee-for-service basis by health insurers, doctors who are paid on a capitated (per-patient) basis have incentives to provide too much care.arrow_forwardQuestion 3: Consistent with Figure 12.1, assume that the FFS price was $100 per visit and the average patient made eight visits per year. A competing managed care organization came in and charged $80 per visit, providing seven visits per year. (a) Calculate the change in total expenditures. (b) Graph the FFS and the managed care market equilibria as was done in Figure 12.1. What do our findings suggest about demand for managed care compared to demand for FFS care?arrow_forwardIndicate whether each statement is true or false, and justify your answer.The goal of health policy is to maximize health, wealth, and equity.arrow_forward
- Indicate whether the statement is true or false, and justify your answer.Health insurance coverage is primarily financed through payroll and other taxes.arrow_forwardExplain the differences among the following three types of government intervention in the health insurance market: (1) public subsidy, (2) mandated insurance benefits, and (3) direct public provision of insurance coverage. If the goal of government intervention is to achieve universal coverage, which strategy is the best (most efficient) in terms of minimizing the deadweight loss?arrow_forward1. An individual has a health insurance plan with a deductible of $1200 and a coinsurance rate of 50%. Their demand curve is Q=20-(P/10), and the equilibrium market price of medical care is $100 per unit. What quantity of medical care would the individual choose to consume? 2. Suppose that consumers are all risk neutral and so they do not purchase health insurance. The equilibrium price of a doctor visit is $30, the supply of doctor visits is perfectly elastic, and the aggregate demand for doctor visits is given by Q=200-5*P. Calculate the effect that universal perfect health insurance (that is, coinsurance rate=0) would have on social welfare, measured as the sum of consumer surplus plus producer surplus. 3. Consider a version of the Akerlof model in which neither buyers nor sellers observe car quality (though somehow – please suspend your disbelief – both buyers and sellers enjoy higher utility from higher quality cars). For this question, please assume that both buyers…arrow_forward
- Indicate whether the statement is true or false, and justify your answer.Barriers to care erected by managed care organizations, such as requiring patients to visit gatekeeper physicians prior to seeking specialist care, can increase consumer welfare.arrow_forwardInability of one to determine marginal value of health care implies that the traditional approach to demand theory does not work very well for health-care services. True or false?arrow_forwardBased on the data presented in the table below estimate elasticity of demand for two price changes: a) price increase from $3 to $9 per hour; and b) price decrease from $9 to $3 per hour. Make sure to use the midpoint formula. Price Per Hour of Therapy Demand for Therapy 0 16 1 15 2 14 3 13 4 12 5 11 6 10 7 9 8 8 9 7 10 6 11 5 12 4 13 3 14 2 15 1 16 0arrow_forward
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