Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 20, Problem 8CQ
To determine
Whether the low cost medical insurance leads to too much consumption of medical services.
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Most systems of medical insurance substantially lower the out-of-pocket costs consumers have to pay for additional units of physician services and hospitalization. Some reduce these costs to zero. How does this method of payment affect the consumption levels of medical services?Might this method of organization result in “too much” consumption of medical services?
Using the appropriate graphs and terminology, explain why a city with 30,000 people is likely to have one hospital but 70 housecleaning service companies.
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.
Chapter 20 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- Which of the following would encourage consumers to economize on health care expenditures and producers to supply health care services more efficiently? Group of answer choices Decreased reliance on the purchase of catastrophic health insurance coverage and greater reliance on insurance with first-dollar coverage and small co-payments. An increase in the share of health care costs paid for by the consumer either directly or from a health savings account. Decreased reliance on personal health savings accounts and health care expenditures from the accounts. The establishment of a national health care system that would provide health care services to people free of charge.arrow_forwardLife insurance companies require applicants to submit to a physical examination as proof of insurability prior to issuing standard life insurance policies. In contrast, credit card companies offer their customers a type of insurance called “credit life insurance” that pays off the credit card balance if the cardholder dies. Would you expect insurance premiums to be higher (per dollar of death benefits) on standard life or credit life policies? Explain.arrow_forwardWhich of the following statements is false? Significant increase in healthcare spending over the past seventy years can in part be explained by the increase in the cost of labor-intensive services. increase in the overall level of medical care prices. increase in intensity and quality of care. increase in the share of the healthcare costs spent on manufactured goods such as drugs. population growtharrow_forward
- 2020 shook our world in unimaginable ways, forcing us to face multiple public health emergencies. And, while technology isn’t the primary tool to solve for systemic health issues, it can play an important role in partnership with government and civil society efforts. However, for technology to be effective, it must be built responsibly – and no matter how good a tool is, people won’t use it unless it has their trust. Discuss two (2) ethical issues linked to the use of computer technology in healthcare, specifically related to the COVID-19 pandemic.arrow_forwardImperfect competition and moral hazard. Some economists have argued that moral hazard and monopolistic health care markets are two socially inefficient problems that partially cancel each other out. Relative to the optimal level of health care Q∗, how much health care is provided in the presence of moral hazard? Assume perfectly competitive health care markets. Relative to the optimal level of health care Q∗, how much health care is provided in the presence of monopolistic health care markets? Assume no moral hazard. Write a one-sentence defense of the argument that moral hazard and imperfectly competitive health care markets could combine to provide a good level of health care provision Q.arrow_forwardHospital has the following treatment options to reduce the incidence of Ventilator-Associated Pneumonia: For Treatment X (status quo), it would cost 50,000 with 40 percent effectiveness, For Treatment Y, it would cost 100,000 with 85 percent effectiveness, For Treatment Z, it would cost 75,000 with 65 percent effectiveness, and For Treatment V, it would cost 80,000 with 68 percent effectiveness. Is there any treatment option that is not economically rational? Explain. If hospital’s willing to pay is $1000, which treatment option it would choose? Explain. With technical innovation, suppose Treatment V increased its effectiveness to 75 percent, would your answer to question (a) above change?arrow_forward
- Answer the following questions: a. Some health analysts believe that physicians try to increase their income by inducing demand for their services. For example, physicians may order unnecessary tests and treatments. Why would patients willingly accept these additional tests and treatments? b. How does the Internet, which makes freely available all sorts of information about diseases and their treatments, affect the physician–patient relationship?arrow_forwardThe size of the uninsured and underinsured population in the United States has become an indication of the access problems in the US healthcare system.TrueFalse Health economics can be defined as An examination of factors that impact healthcare An explanation of theories, models and tools that can be applied to understand costs, access, and quality One way to understand how best to compare and contrast alternatives Help healthcare leaders understand the costs and consequences of options All of the abovearrow_forwardQ)What are some reasons that health care markets may not be perfectly competitive? a. Many types of employees in health care must have licenses b. Insurance means consumers do not pay the full market price for the good or service c. Consumers lack information d. All of the abovearrow_forward
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