# CRapter 1s Why Health Economics? 2 Mechanics usually have better information about how to fix automobiles than their customers do. What problems does this advantage create? Do mechanics or their customers do anything to limit these problems? 3 A mandatory health insurance plan costs \$4,000. One worker earns \$24,500 in employment income and \$500 in investment income Another worker earns \$48,000 in employment income and \$2,00o in investment income. A third worker earns \$68,000 in employment income and \$7,000 in investment income. A premium-based system would cost each worker \$4,000. A wage tax-based system would cost each worker 8.5 percent of wages. An income tax-based system would cost each worker 8 percent of income. For each worker, calculate the cost of the insurance as a share of total income 6) Worker 1Worker 2 Worker 3 \$24,500 \$48,000\$68,000 \$500 \$2,00o \$7,000 \$4,000 \$4,000 \$4,000 = Employment income ef Investment income - Premium cost of insurance Premium as a percentage of income P/(E +ID W = Wage tax cost of insurance-0.085 × E Wage tax cost as a percentage of income W/CE+D 7-income tax cost of insurance-0.080 × (E + 1) Income tax cost as a percentage of incomeTE

Question

A mandatory health insurance plan costs \$4,000. One worker earns \$24,000 in employment income and \$500 in investment income. Another worker earns \$48,000 in employment income and \$2,000 in investment income. A third worker earns \$68,000 in employment income and \$7,000 in investment income. A premium-based system would cost each worker \$4,000. A wage tax-based system would cost each worker 8.5 percent of wages. An income tax-based system would cost each worker 8 percent of income. For each worker, calculate the cost of the insurance as a share of total income.

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