Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (6th Edition)
6th Edition
ISBN: 9780134304755
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 7, Problem 7.3.12PA
To determine
The effect on health insurance companies due to the demand for medical services.
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New York Times columnist David Brooks wrote about the implementation of the Affordable Care Act (ACA) and described a possible adverse selection cascade: “the young may decide en masse that it is completely irrational for them to get health insurance that subsidizes others.”
a. Why might it be irrational for young and healthy people to buy health insurance?
b. In what sense do young and healthy people who buy health insurance provide a subsidy to people who are older or who are ill?
c. What do you think Brooks meant by an adverse selection cascade? How might the actions of young and healthy people contribute to adverse selection problems in the health insurance system?
Briefly discuss the demand and supply factors that contribute to rising health costs. Specify how (a ) asymmetric information, ( b) fee-for-service payments, ( c) defensive medicine, and ( d) medical ethics might cause health care costs to rise.
Ronald Coase in his classic October 1960 article “The Problem of Social Cost” (Journal of Law and Economics 3[1], pp.1-4) discussed collective ownership of resources. Collective ownership often means that no one takes care of resources, or at minimum that resources are not cared for as well as if they were privately owned. What are some of problems with collective ownership in the health care industry? Can you think of some examples in which collective ownership works? In what situations does it not work?
Chapter 7 Solutions
Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (6th Edition)
Ch. 7 - Prob. 7.1.1RQCh. 7 - Prob. 7.1.2RQCh. 7 - Prob. 7.1.3RQCh. 7 - Prob. 7.1.4PACh. 7 - Prob. 7.1.5PACh. 7 - Prob. 7.1.6PACh. 7 - Prob. 7.2.1RQCh. 7 - Prob. 7.2.2RQCh. 7 - Prob. 7.2.3RQCh. 7 - Prob. 7.2.4RQ
Ch. 7 - Prob. 7.2.5PACh. 7 - Prob. 7.2.6PACh. 7 - Prob. 7.2.7PACh. 7 - Prob. 7.2.8PACh. 7 - Prob. 7.2.9PACh. 7 - Prob. 7.3.1RQCh. 7 - Prob. 7.3.2RQCh. 7 - Prob. 7.3.3RQCh. 7 - Prob. 7.3.4RQCh. 7 - Prob. 7.3.5PACh. 7 - Prob. 7.3.6PACh. 7 - Prob. 7.3.7PACh. 7 - Prob. 7.3.8PACh. 7 - Prob. 7.3.9PACh. 7 - Prob. 7.3.10PACh. 7 - Prob. 7.3.11PACh. 7 - Prob. 7.3.12PACh. 7 - Prob. 7.3.13PACh. 7 - Prob. 7.3.14PACh. 7 - Prob. 7.3.15PACh. 7 - Prob. 7.4.1RQCh. 7 - Prob. 7.4.2RQCh. 7 - Prob. 7.4.3RQCh. 7 - Prob. 7.4.4RQCh. 7 - Prob. 7.4.5RQCh. 7 - Prob. 7.4.6PACh. 7 - Prob. 7.4.7PACh. 7 - Prob. 7.4.8PACh. 7 - Prob. 7.4.9PACh. 7 - Prob. 7.4.10PACh. 7 - Prob. 7.4.11PACh. 7 - Prob. 7.4.12PACh. 7 - Prob. 7.4.13PACh. 7 - Prob. 7.4.14PA
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- Briefly discuss at least one of the outcomes of the 2008 Oregon Experiement? Briefly discuss why Medicaid payments to providers are lower than those paid through private insurers.arrow_forwardJay Bhattacharya and M. Kate Bundorf of Stanford University have found evidence that people who are obese and work for firms that have employer-provided health insurance receive lower wages than people working at those firms who are not obese. At firms that do not provide health insurance, obese workers do not receive lower wages than workers who are not obese. Source: Jay Bhattacharya and M. Kate Bundorf, "The Incidence of the Health Care Costs of Obesity," Journal of Health Economics, Vol. 28, No. 3, May 2009, pp. 649-58. Firms that provide workers with health insurance may pay a lower wage to obese workers than to workers who are not obese because the former tend to be less healthy and consequently A. more costly to insure and therefore employ due to their higher claim submission rate. B. less productive at work. C. experience higher rates of absenteeism and early retirement. D. all of the above. E. A and B only. Regarding the…arrow_forwardThe following diagram shows the market for medical checkup. What are the equilibrium price and quantity of medical checkup? Which kind of externality problems exists in the market for medical checkup? How does this externality problem affect the efficiency of the market? Explain in detail. How can the government solve this externality problem? Explain in detail.arrow_forward
- Briefly describe the theory of rational ignorance.arrow_forwardSuppose that Hubert, an economist from an AM talk radio program, and Kate, an economist from a school of industrial relations, are arguing over health insurance. The following dialogue shows an excerpt from their debate: Kate: A popular topic for debate among politicians as well as economists is the idea of providing government assistance for health benefits. Hubert: I think it is oppressive for the government to tax people who take care of themselves in order to pay for health insurance for those who are obese. Kate: I disagree. I think government funding of health insurance is useful to ensure basic fairness. The disagreement between these economists is most likely due to (DIFFERENCE IN SCIENTIFIC JUDGEMENT, DIFFERENCE IN VALUES, DIFFERENCE BETWEEN PERCEPTION VERSUS REALITY) . Despite their differences, with which proposition are two economists chosen at random most likely to agree? A. Employers should not be restricted from outsourcing work to foreign nations.…arrow_forwardA noted insurance authority has said, “Because the financing of long-term care is inconsistent with insurance principles, it is a problem that does not lend itself to solution through insurance.” In what ways is the financing of long-term care inconsistent with insurance principles? What, in your opinion, is the solution to the problem of financing long-term care?arrow_forward
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