An actuarially fair premium is set equal to the insurer's expected payout, assuming no admin- istrative costs or profits. True, False, or Uncertain? Support your answer with an explanation (one to two sentences) or a diagram. If government intervenes in the market for health insurance in order to address the adverse selection problem, everyone will always be better off as a result. True, False, or Uncertain? Support your answer with an explanation (one to two sentences) or a diagram. Optimal health insurance plans should provide generous insurance for unpredictable/large events and little insurance for predictable/minor events. True, False, or Uncertain? Support your answer with an explanation (one to two sentences) or a diagram. List two examples of moral hazard in health insurance. List two examples of potential adverse selection problems in any private or social insurance.

An actuarially fair premium is set equal to the insurer's expected payout, assuming no admin- istrative costs or profits. True, False, or Uncertain? Support your answer with an explanation (one to two sentences) or a diagram. If government intervenes in the market for health insurance in order to address the adverse selection problem, everyone will always be better off as a result. True, False, or Uncertain? Support your answer with an explanation (one to two sentences) or a diagram. Optimal health insurance plans should provide generous insurance for unpredictable/large events and little insurance for predictable/minor events. True, False, or Uncertain? Support your answer with an explanation (one to two sentences) or a diagram. List two examples of moral hazard in health insurance. List two examples of potential adverse selection problems in any private or social insurance.

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter1: U.s. Medical Care: An Uncertain Future

Section: Chapter Questions

Problem 5QAP

See similar textbooks

Similar questions

Indicate whether the statement is true, false, or unclear, and justify your answer.When the price elasticity of demand for health care is zero, health insurance coverage induces no moral hazard.
Suppose that there are two countries, Beta and Gamma. Suppose further that everyone in country Beta is on Insurance B and everyone in country Gamma is on Insurance G. Suppose further that both governments use government-set price controls. In 2005, country Beta decided to change the reimbursement rate for pharmaceuticals, but country Gamma did not make this change. You, a researcher, want to study the effect of offering coverage for this drug had an impact on health expenditures. You have average health expenditures for State Beta and Gamma prior to 2005 and post-2005. Using the information in the table below, a quick difference-in-difference calculation suggests covering this drug ____ health expenditures by approximately ____. State Time Periods Pre-2005 Post-2005 State Beta $1000 $1400 State Gamma $1500 $1700 a. decreased; $400 b. increased; $200 c. increased; $400 d. decreased; $200
Suppose that there are two countries, Beta and Gamma. Suppose further that everyone in country Beta is on Insurance B and everyone in country Gamma is on Insurance G. Suppose further that both governments use government-set price controls. In 2005, country Beta decided to change the reimbursement rate for pharmaceuticals, but country Gamma did not make this change. You, a researcher, want to study the effect of offering coverage for this drug had an impact on health expenditures. You have average health expenditures for State Beta and Gamma prior to 2005 and post-2005. Using your finding from the question above, you can infer that country Beta likely _____ reimbursement rates for pharmaceutical drugs. State Time Periods Pre-2005 Post-2005 State Beta $1000 $1400 State Gamma $1500 $1700 a. lower b. did not change c. raised
Suppose, if ill, that Fred’s demand for health services is summarized by the demand curve Q = 50 − 2P , where P is the price of services. How many services does he buy at a price of $20? Suppose that Fred’s probability of illness is 0.25. What is the actuarially fair price of health insurance for Fred with a zero coinsurance rate? If the insurance company pays Fred’s entire loss, will the insurance company offer him insurance at the actuarially fair rate? Why? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Faustian health economics. Consider Figure 11.10, which shows the locus of feasible contracts for the population of the nation of Pcoria. In which corner of this diagram (northeast, southeast, northwest, or southwest) is utility highest for consumers? What prevents insurance companies from offering contracts in this corner? On your own version of Figure 11.10, plot new points to represent where the market would be under (i) a nationally mandated full insurance policy and (ii) an insurance ban. Would a nationally mandated full insurance policy be optimal for Pcoria? What about an insurance ban?
Empirical evidence suggests that state laws mandating health insurance coverage for alcoholism treatment leads to moral hazard on the part of the insured population. Given this information, what are you most likely to observe in a state that has passed such a law? A. Less use of alcohol treatment facilities B. Lower rates of drunk driving C. Higher rates of alcoholism D. Lower sales of alcohol
Insurance coverage has been shown to diminish the importance of time in the decision about how much medical care to seek and which providers to use. True OR False
The figure shows estimated medical costs versus what a user actually pays for three health insurance plans with different deductibles. For which plan does the user pay the least for estimated medical costs of $4,000? **SEE DIAGRAM** $500 deductible plan $1,000 deductible plan $2,000 deductible plan The user pays the same for all three plans.
Indicate whether the statement is true, false, or unclear, and justify your answer.Pauly (1974) shows that the socially optimal level of insurance in a market is either full or none, depending on whether moral hazard or risk aversion predominates.
In economic terms, moral hazard is the negative relationship between the out-of-pocket price of the physician visit and the quantity of the physician visits demanded in a given time period. a.True b.False
Let W represents an individual’s annual earned income and U(W) = (W/10)0.5 is this individual’s von Neumann-Morgenstern utility index (or utility function) . This individual earned income is $49,000. This individual faces the prospect of a 20% chance of needing health care, with a price tag of $13,000. Assume this person is risk averse. Also assume that the insurance company has only claim costs and that administrative costs are $0. The maximum health insurance premium this individual is willing to pay is??
Faustian health economics. Consider Figure 11.10, which shows the locus of feasible contracts for the population of the nation of Pcoria. In which corner of this diagram (northeast, southeast, northwest, or southwest) is utility highest for consumers? What prevents insurance companies from offering contracts in this corner? On your own version of Figure 11.10, plot new points to represent where the market would be under (i) a nationally mandated full insurance policy and (ii) an insurance ban. (Please draw a diagram) Would a nationally mandated full insurance policy be optimal for Pcoria? What about an insurance ban? Suppose the devil approaches the newly elected president of Pcoria with an unusual bargain. He offers to magically eliminate moral hazard, but in return, Pcoria must forbid contracts that are more than half full. On a new version of Figure 11.10, draw a new locus of the contracts that would be feasible if the president takes the devil's bargain. Should the president take…