EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Chapter 18, Problem 1SP
To determine
Marginal cost of the consultation.
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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
Even though the total cost of an uninsured hospital stay is lower, why would an uninsured person actually end up paying more than those with insurance?
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.
Chapter 18 Solutions
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- For a person who previously had no insurance and received an insurance plan paying for 80 percent of all types of medical care, what increase in use would you expect for hospital care, dental care, and physician services, on average?arrow_forwardTo receive coverage for bodily injury resulting from an accident with a stolen vehicle, an individual should purchase which of the following coverage? please read the question carefully? Medical payment Uninsured Motorists Bodily injury liability Property damage liabilityarrow_forwardJulia is a 28- year-old nonsmoking , non-drinking female of normal weight Because of adverse selection in health insurance , (A) She will be charged less for her premiums than people who are higher risks ) B)She is less likely to buy health insurance than the average person, because policy premiums are based on expected medical expenditures of people who are less healthy than she is ( C) When she get health insurance , she will be less likely to take care of herself. ) D)She must get health insurance early in life, and is likely to lose health insurance if she smokes , drinks to excess, or gains weight. E) She is more likely than the average person to buy health insurance , because she is more likely to be offered it.arrow_forward
- Approximately __________ million Americans are without health insurance.arrow_forwardIn 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.Falsearrow_forwardThe 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.arrow_forward
- 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 alcoholarrow_forwardIn the mid-1990s, the state of New Jersey revised its rules for the individual insurance market and began requiring that insurers charge the same premiums for the same coverage to all applicants. Assuming that insurers had previously used medical underwriting, which of the following is a predictable consequence of adverse selection? 1) Insurance becomes less attractive to the healthiest individuals, so fewer of them buy it 2) Insurers’ average costs of providing coverage increase because of a changing risk pool 3) The average age of those buying in the individual market goes up 4) All of the abovearrow_forwardMany consider the profit motive of physicians and hospitals a moral hazard, and if patient care isn’t valued over profit, the patient may receive poor-quality treatment. Is this a fair assumption?arrow_forward
- The presence of what two forces in a health insurance market may cause the market to completely unravel?arrow_forwardQ73 Adverse selection is... a. Asking a private pilot about the safety of his plane. b. Purchasing more dental insurance when you know your teeth are especially bad. c. Purchasing the required homeowner's insurance when you buy a condo. d. Asking a doctor if you are sick. e. Asking your lawyer if you should sue your doctor for malpractice.arrow_forwardIndicate whether the statement is true or false, and justify your answer.In an actuarially fair insurance contract, the insurance premium equals the probability of sickness times the payout amount.arrow_forward
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