Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Question
Chapter 3, Problem 18EQ
To determine
The impact of Munchausen’s syndrome on optimal health H* in the light of Grossman model.
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Indicate whether the statement is true or false, and justify your answer.Results from the Oregon Medicaid Experiment suggest that having health insurance has a positive impact on health status.
In what sense is the individual considered a “producer” of health in the Grossman model?
Indicate whether the statement is true or false, and justify your answer.In the 1970s, researchers were worried that, while Americans were living longer than previous generations, they were actually less healthy during old age than before. This phenomenon is known as the “compression of morbidity.”
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- 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.arrow_forwardIn the early 2000s, the state of Massachusetts in the U.S. implemented a health reform aimed at enrolling people without health insurance into an insurance plan. The reform required people without health insurance (at least those who could afford it) to buy insurance, and put in place penalties on those who nevertheless chose not to buy insurance. Below is the abstract of a recent National Bureau of Economic Research working paper entitled “Health Reform, Health Insurance, and Selection: Estimating Selection into Health Insurance Using the Massachusetts Health Reform” by Martin Hackmann, Jonathan Kolstad, and Amanda Kowalski. The authors conducted a study of the effects of the Massachusetts reform. They write: We implement an empirical test for selection into health insurance using changes in coverage induced by the introduction of mandated health insurance in Massachusetts. Our test examines changes in the cost of the newly insured relative to those who were insured prior to the…arrow_forwardThe government wants to make medicare benefits available to more people, but to achieve this goal, it needs to make cuts in the existing medicare budget. The two areas where they are considering cuts are non-essential elective surgery and 6-12 month mental health care programs. Applying the concept of diminishing marginal utility, the budget cuts should be made for spending on: a. neither can be compared by measuring marginal utility. b. mental health therapy due to its higher marginal return rate. c. elective surgery due to its lower marginal return rate. d. both programs, which have the same marginal return rate.arrow_forward
- Suppose consumers consume and gain utility from two types of goods and services – (1) health care and (2) all other goods & services. Using this information, derive the demand curve for health care.arrow_forwardInsurance 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 Falsearrow_forwardMedicare recipients can purchase supplemental private insurance (known as Medigap insurance) to fill the gap in coverage left by Medicare. This gap includes copayments, deductibles, and prescription drug expenses not covered by Medicare. Several years ago, the government enacted regulations that specify minimum standards for items that Medigap policies must cover. This made the policies more expensive, and as a consequence, about 25 percent of the elderly who would have purchased some Medi-gap insurance purchased none at all [Finkelstein, 2004]. Consider an individual who consumes two goods, "insurance" and "all other goods." The cost of a unit of Medigap insurance is $1, as is the cost of a unit of all other goods. Sketch a budget constraint and set of indifference curves that are consistent with the following scenario: In an unregulated market, an individual with a $30,000 income purchases $5,000 worth of Medigap insurance. The government then puts mandates on Medigap policies that…arrow_forward
- How can the New York sick leave law impact the use of emergency rooms? Reference the Grossman model for guidance.arrow_forwardThe following is an excerpt from "The Labor Market Effects of Rising Health Insurance Premiums," by Katherine Baicker, Amitabh Chandra. If workers in a certain sector of the economy or those who are married are systematically more likely to have different levels of unobservable characteristics that affect health insurance premiums, then such a correlation is possible. This problem is identical to the standard endogeneity problem in program evaluation, where receipt of the treatment is correlated with unobservable characteristics of the person receiving treatment. A solution to this problem is to instrument for imputed premiums using variables that are uncorrelated with εi and mi but are correlated with imputed health insurance premiums. In our analysis we use state‐level, per‐capita medical malpractice payments as an instrument for imputed premiums. In other words, in order for malpractice payments to be a valid instrument for health insurance premiums, it must be the case that…arrow_forwardThe 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.arrow_forward
- Indicate whether each statement is true or false, and justify your answer.Cost–benefit analysis is used to determine which medicines and treatments US Medicare will cover.arrow_forwardIndicate whether the statement is true or false, and justify your answer.In the Grossman model, the marginal efficiency of investment in health care declines as health improves.arrow_forwardIndicate whether the statement is true or false, and justify your answer.An hour spent exercising always pays for itself by decreasing the time spent sick by more than an hour.arrow_forward
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