11. Problems and Applications Q11Consider how health insurance affects the quantity of health care services performed. Suppose that the typical medical procedure has a cost of $160,yet a person with health insurance pays only $40 out of pocket. Her insurance company pays the remaining $120. (The insurance company recoupsthe $120 through premiums, but the premium a person pays does not depend on how many procedures that person chooses to undergo.)Consider the following demand curve in the market for medical care.Use the black point (plus symbol) to indicate the quantity of procedures demanded if each procedure has a price of $160. Then use the grey point(star symbol) to indicate the quantity of procedures demanded if each procedure has a price of $40.(?)Price of Medical Procedures200180160140120100806040200010201Demand6030 40 5070Quantity of Medical Procedures.80 90 100+Qat P=$160Qat P=$40 If the cost of each procedure to society is truly $160, the quantity that maximizes total surplus isEconomists often blame the health insurance system for excessive use of medical care.procedures.Given your analysis, the use of care might be viewed as excessive because consumers get procedures whose value isproducing them.than the cost of

A form of insurance called health insurance aids in paying for hospital and surgery costs. It can…

If the cost of each procedure to society is truly $160, the quantity that maximizes total surplus is Economists often blame the health insurance system for excessive use of medical care. procedures. Given your analysis, the use of care might be viewed as excessive because consumers get procedures whose value is producing them. than the cost of

If the cost of each procedure to society is truly $160, the quantity that maximizes total surplus is Economists often blame the health insurance system for excessive use of medical care. procedures. Given your analysis, the use of care might be viewed as excessive because consumers get procedures whose value is producing them. than the cost of

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter4: Demand, Supply, And Markets

Section: Chapter Questions

Problem 6QFR

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Suppose you have an insurance plan in which you pay the market price for medical care until you meet a deductible of $1,000, after which you have a coinsurance rate of .20. Answer parts a and b assuming your inverse demand curve for medical care is P = 400 – 10Q and the market price for medical care is $200 per unit.a) Graph the price line and your demand curve. On the graph, label the values of the x and y intercepts of the demand curve, the quantity where you meet the deductible, the horizontal sections of the price line, and the point(s) where the demand curve intersects the price line.b) Find the number of units of medical care that you will demand. Show all calculations that youperformed in your analysis.
Inability 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?
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 $2,000 deductible plan The user pays the same for all three plans.
Consider Ron’s demand for after school care for his children. The marginal benefit Ron receives for every hour of childcare is provided in the accompanying table. After school childcare(hours per day) Marginal benefit($ per hour) 1 $32 2 $30 3 $20 4 $14 a. If an hour of childcare costs $24, how many hours will Ron purchase each day? Assume Ron can only purchase care in one-hour increments (no partial hours). b. If an hour of childcare costs $18, how many hours will Ron purchase each day? Assume Ron can only purchase care in one-hour increments (no partial hours).
Which one among these is not one factor that makes health care service difficult to insure? 1.future expendature on health care is uncertain 2.the payment for each health procedure are determined by insurers 3.Health care providers are paid based on their service rather then their outcome from their service
Suppose 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)?
Suppose we allocate a fixed budget for tuberculosis screening between two alternatives: screening the population generally, which has a marginal cost per test of MCG and a marginal benefit of MBG additional cases detected per test, and screening in homeless shelters, with a corresponding MCS and MBS. Assume it is currently true that MBG/MCG < MBS/MCS. Understanding that MB decreases (increases) as quantity increases (decreases) and the reverse is true for MC, we can conclude that: a. too much screening is being done at homeless shelters relative to general screening. b. too much general screening is being done relative to screening at homeless shelters. c. the price of screening in homeless shelters is too high. d. the allocation is already optimal if there is a fixed budget because we can’t equate the ratios of marginal benefit and marginal cost. e. we can only make the allocation optimal if the prices can be changed
Explain how each of these situations will affect the quantity demanded of health insurance: a) A reduction in the tax-exempt fraction of health insurance premiums. b) An increase in buyer income. c) An increase in per capita medical expenses.
Explain how each of these situations will affect the quantity demanded of health insurance: d) New technologies that enable medical illness to be predicted more accurately. e) A tendency among buyers to become less risk, on average.
The fact that most medical care purchases are financed through insurance: a. has no effect on health care consumption because aggregate costs are the same regardless of payment method. b. reduces the amount of health care consumed by raising the price of additional units of care. c.has decreased health care costs and therefore reduced aggregate health care expenditures. d. increases the amount of health care consumed by reducing the price of additional units of care.
The cost of employer-sponsored health care benefits are expected to approach $16,800 per employee next year. Big employers project that their total cost of providing medical and pharmacy benefits will rise 6 percent for the sixth consecutive year. The total cost of health care, is estimated to average $17,800 per employee in 2022, up from $7,099 last year. Large employers will cover roughly 70 percent of those costs. For Employers, what is the “OPPORTUNTY COST “of health care? (not the price.)
which option is correct about Medicare and Medicaid? Medicaid is a federally-sponsored program while Medicare is sponsored with states and federal governments The health care cost of Medicare enrollees in the last two years of their life is very small Medicaid is less costly than Medicare Under the Affordable Care Act, Medicare was expanded at the cost of contracting Medicaid