EBK HEALTH ECONOMICS AND POLICY
7th Edition
ISBN: 9781337668279
Author: Henderson
Publisher: YUZU
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Chapter 9, Problem 3QAP
To determine
A physician’s dual nature as an adviser and a provider supports the
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One major premise of the Rothschild–Stiglitz model is that there is a perfectly competitive market for health insurance. Suppose instead that the market is not perfectly competitive, and in fact competitor firms have a hard time entering the market. Could a pooling equilibrium occur in this case? What is it about competition that prevents pooling in the Rothschild–Stiglitz model? No formal proof is necessary, but do make your reasoning clear. Evaluate the following statement: competition in health insurance markets is harmful.
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?
Suppose that there are two countries, Beta and Gamma. Suppose further that everyone in country Beta is on Insurance B and everyone in country Gamma is on Insurance G. Suppose further that both governments use government-set price controls.
In 2005, country Beta decided to change the reimbursement rate for pharmaceuticals, but country Gamma did not make this change. You, a researcher, want to study the effect of offering coverage for this drug had an impact on health expenditures. You have average health expenditures for State Beta and Gamma prior to 2005 and post-2005. Using the information in the table below, a quick difference-in-difference calculation suggests covering this drug ____ health expenditures by approximately ____.
State
Time Periods
Pre-2005
Post-2005
State Beta
$1000
$1400
State Gamma
$1500
$1700
a. decreased; $400
b. increased; $200
c. increased; $400
d. decreased; $200
Chapter 9 Solutions
EBK HEALTH ECONOMICS AND POLICY
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- Suppose that there are two countries, Beta and Gamma. Suppose further that everyone in country Beta is on Insurance B and everyone in country Gamma is on Insurance G. Suppose further that both governments use government-set price controls. In 2005, country Beta decided to change the reimbursement rate for pharmaceuticals, but country Gamma did not make this change. You, a researcher, want to study the effect of offering coverage for this drug had an impact on health expenditures. You have average health expenditures for State Beta and Gamma prior to 2005 and post-2005. Using your finding from the question above, you can infer that country Beta likely _____ reimbursement rates for pharmaceutical drugs. State Time Periods Pre-2005 Post-2005 State Beta $1000 $1400 State Gamma $1500 $1700 a. lower b. did not change c. raisedarrow_forwardIndicate whether the statement is true or false, and justify your answer.A primary cause of increasing uninsurance in the US over the past decade is that more employers are deciding to stop providing health insurance coverage entirely.arrow_forwardWill insurance prices in 2024 erase the momentum of lower health costs despite the IRA prescription drug efforts?arrow_forward
- TRUE or FLASE? A. The Beveridge model in the United Kingdom reduces moral hazard by having public providers compete to provide high quality care. B. The Bismarck Model in Germany reduces adverse selection primarily by having a universal, compulsory health insurance system. C. The Bismarck Model in Germany emphasizes equity over choice whereas the Beveridge Model in the United Kingdom emphasize choice over equity. D. The Bismarck Model in Germany reduces moral hazard by requiring cost sharing. E. The Bismarck Model in Germany controls costs by allowing private insurers to negotiate competitive rates with private physicians.arrow_forwardIndicate whether the statement is true or false, and justify your answer.The thrifty phenotype hypothesis states that early-life events after birth have a strong influence on health status even in adulthood.arrow_forwardOne major premise of the Rothschild-Stiglitz (RS) model is that there is a perfectly competitive market for health insurance. Suppose instead that the market is not perfectly competitive, and in fact competitor firms have a hard time entering the market. Could a pooling equilibrium occur in this case? What is it about competition that prevents pooling in the RS model? No formal proof is necessary, but do make your reasoning clear. Evaluate the following statement: competition in health insurance markets is harmful.arrow_forward
- The price elasticity of demand for health care has been estimated to be −0.2. Characterize this demand as price elastic, unit price elastic, or price inelastic. The text argues that the greater the importance of an item in consumer budgets, the greater its elasticity. Health-care costs account for a relatively large share of household budgets. How could the price elasticity of demand for health care be such a small number?arrow_forwardOne of the most robust, fundamental “facts” of health economics is the SES and health gradient. a) Define the SES and health gradient. b) Give three ways in which the SES and health gradient is robust. c) Provide evidence that some of the gradient is correlational (i.e., give a potential confounder) and evidence that the gradient is in fact causal. d) i. Give an interpretation of Figure 1 below in layperson terms. ii. What pattern do you see for men vs women? iii. “The education and mortality gradient does not depend on healthcare spending or whether the country has universal healthcare.” Use Figure 1 to support or refute this claim.arrow_forwardWhat are three detailed reasons why healthcare has negative macroeconomic implications in the context of the ongoing COVID-19 pandemic?arrow_forward
- Indicate whether the statement is true or false, and justify your answer.In the RAND HIE, the arc elasticity of demand for inpatient care was larger (in absolute value) than the arc elasticity of demand for outpatient care.arrow_forwardCan you explain As members of the Baby Boom generation approach advanced ages, their demand for medical care will change. Referring to the graphs below, will this demand change be reflected in the movement from point A to to point B, or in the movement from D1 to D2? Please explain your answer.arrow_forwardIndicate whether each statement is true or false, and justify your answer.The goal of health policy is to maximize health, wealth, and equity.arrow_forward
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