Assume that health insurance is private in a country, and the market for insurance iscompetitive. The figure below shows the marginal benefit and willingness and abilityto pay curve.Premium (thousands of dollars per year)$160 billion.$80 billion.$160 million.$80 million.O006ND = MB1020 30 40 50Quantity (millions of families insured)Suppose that the marginal social benefit of insurance exceeds the willingness andability to pay by a constant $2,000 per family per year. Suppose the marginal cost ofhealth insurance is a constant $8,000 a year. If the government decides to providepublic health insurance, how much will taxpayers have to pay?

Marginal social benefit refers to the satisfaction received by consumers of a good or service plus…

Answered: Assume that health insurance is private…

Assume that health insurance is private in a country, and the market for insurance is competitive. The figure below shows the marginal benefit and willingness and ability to pay curve.

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter12: Medicare

Section: Chapter Questions

Problem 4QAP

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Question

Assume that health insurance is private in a country, and the market for insurance is
competitive. The figure below shows the marginal benefit and willingness and ability
to pay curve.
Premium (thousands of dollars per year)
$160 billion.
$80 billion.
$160 million.
$80 million.
O
00
6
N
D = MB
10
20 30 40 50
Quantity (millions of families insured)
Suppose that the marginal social benefit of insurance exceeds the willingness and
ability to pay by a constant $2,000 per family per year. Suppose the marginal cost of
health insurance is a constant $8,000 a year. If the government decides to provide
public health insurance, how much will taxpayers have to pay?

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