7) In McGuire and Pauly (1991) model of physician inducement, an indifference curve- a) between income and leisure is downward sloping b) between income and leisure is upward sloping c) measures the combinations of income and leisure that provide different levels of utility d) b and c
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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…One of the most robust, fundamental “facts” of health economics is the SES and health gradient. a) Define the SES and health gradient. b) Give three ways in which the SES and health gradient is robust. c) Provide evidence that some of the gradient is correlational (i.e., give a potential confounder) and evidence that the gradient is in fact causal. d) i. Give an interpretation of Figure 1 below in layperson terms. ii. What pattern do you see for men vs women? iii. “The education and mortality gradient does not depend on healthcare spending or whether the country has universal healthcare.” Use Figure 1 to support or refute this claim.Show how a consumer would choose between medical care and health(y) behavior activities using the graphical representation of the consumer choice model (assume that “amounts” of healthy behavior have “costs” or prices).
- Exercise 2. In order to encourage energy conservation, many public utility companies charge consumers a higher rate on units of electricity consumed in excess of some threshold amount. In contrast, a common practice by other firms is to offer “quantity discounts” to consumers who purchase large quantities of a good. Suppose income is $100, PX = $2 if theconsumer buys less than 40 units of X, and PY = $5.A. For the energy case, assume PX = $3 if the consumer buys more than 40 units of XB. For the “quantity discounts” case, assume PX = $1 after 40 units of X were consumed Draw the budget constraints in each of the cases above. What are the implications of the opportunity sets in terms of consumer behavior to consume each of the products?Give typing answer with explanation and conclusion Suppose that a consumer’s demand curve for medical care is QD = −3P +17 with P = $5. Suppose that the beneficiary obtains an insurance plan through an insurer with a 25% coinsurance rate. Under the insurance arrangement, find the following: (a) Equilibrium price and quantity of medical care? (b) Magnitude of deadweight loss? (c) Cost to the beneficiary? (d) Cost to the insurer?Indicate whether the statement is true or false, and justify your answer.Results from the Oregon Medicaid Experiment suggest that having health insurance has a positive impact on health status.
- Name three products for which subjectivediscretionary income might be a better predictor ofconsumption than actual income. Justify your answer.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.Suppose that you conduct a survey and collect data on people's health insurance plan (HMO, PPO, Fee-for-service). You plot the information and find that people who have less restrictive health insurance plans also have higher health care expenditures. From this information you a. cannot tell if this is due to the structure of the plan or if higher risk individuals opt into less restrictive plans. b. conclude that higher risk individuals opt into less restrictive insurance plans. c. conclude that less restrictive health insurance plans leads to higher health expenditures.
- 1. Which of the following behaviors contradict the standard discounted utilitymodel? (A) hyperbolic discounting; (B) context effects; (C) preference for commitments; (D) all of the above. 2. A nudge is a policy solution that is(A) cheap to implement;(B) has a predictable effect on agents’ behavior;(C) does not put additional constraints on agents’ freedom of choice;(D) all of the above.The primary purpose of he Coordinalion of Benefits provision found in most group Major Medical policies is to perform which of the following funclions? A.Providing coverage for insureds who are leaving heir employment B.Preventing a claimant from profiting from an injury or sickness C.Allowing an insured to receive bolh Disability Income benefits and Medical Expense benefits if entilled o both D.Permitting an insurance company to pay benefits direclly to providers of medical servicesHere is a selection from an abstract of a recent study entitled “The effect of health insurance coverage on the use of medical services” by Michael Anderson, Carlos Dobkin, and Tal Gross (2010). NBER Working paper No. 15823. Substantial uncertainty exists regarding the causal effect of health insurance on the utilization of care. Most studies cannot determine whether the large differences in healthcare utilization between the insured and the uninsured are due to insurance status or to other unobserved differences between the two groups. In this paper, we exploit a sharp change in insurance coverage rates that results from young adults “aging out” of their parents insurance plans to estimate the effect of insurance coverage on the utilization of emergency department (ED) and inpatient services. [In the US, children are eligible for insurance coverage through their parents’ insurance only up to their 23rd birthday, at which point they lose eligibility.] Using the National Health…
