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)30 million.40 million.10 million.20 million.12O10CO62O10D = MB5020 30 40Quantity (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. What is the efficient quantity of healthinsurance policies?

The market equilibrium quantity is where the private marginal benefit curve intersects the 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. Premium (thousands of dollars per year) 30 million. 40 million. 10 million. 20 million. O co 6 4 2 10 D = MB 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. What is the efficient quantity of health insurance policies?

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) 30 million. 40 million. 10 million. 20 million. O co 6 4 2 10 D = MB 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. What is the efficient quantity of health insurance policies?

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter12: Medicare

Section: Chapter Questions

Problem 4QAP

See similar textbooks

Similar questions

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. 2 Premium (thousands of dollars per year) $10 million. $20 billion. $10 billion. $20 million. 8 6 2 0 D = MB 10 50 20 30 40 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. What is the deadweight loss created?
1. An individual has a health insurance plan with a deductible of $1200 and a coinsurance rate of 50%. Their demand curve is Q=20-(P/10), and the equilibrium market price of medical care is $100 per unit. What quantity of medical care would the individual choose to consume? 2. Suppose that consumers are all risk neutral and so they do not purchase health insurance. The equilibrium price of a doctor visit is $30, the supply of doctor visits is perfectly elastic, and the aggregate demand for doctor visits is given by Q=200-5*P. Calculate the effect that universal perfect health insurance (that is, coinsurance rate=0) would have on social welfare, measured as the sum of consumer surplus plus producer surplus. 3. Consider a version of the Akerlof model in which neither buyers nor sellers observe car quality (though somehow – please suspend your disbelief – both buyers and sellers enjoy higher utility from higher quality cars). For this question, please assume that both buyers…
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.
Why has the government chosen to provide moneary incentives to bring about the move to health information exchanges?
6. The demand for the doctor's visits, Q, is the following: Q= 5 – 0.04P. The market price of a visit, equals the MC of $100. What is the equilibrium number of visits? What if the consumer purchases full-coverage (no coinsurance) health insurance and the demand stays the same. How many doctor visits would the patient consume? Calculate the deadweight loss or moral hazard cost as a result of the insurance coverage. Remember, DWL is there if units for which MB>MC are not produced, or if units for which MC>MB are produced.
What would happen if, in order to provide lower cost health care, the government decided to set a price ceiling (Pmax) in the health insurance market? (Please answer questions a, b, and c below.) What is the effect of this maximum price legislation on the market for health insurance? Briefly explain the situation for both consumers and producers (i.e. health care providers). What might the government do to achieve their intended aims (i.e. lower costs and increased quantity)?
Suppose the government imposes a system of price ceilings in the health care industry as part of an overall health care reform bill. a) draw a graph of the health care market and show equilibrium price and quantity. b) assume the government imposes an effective price ceiling in the health care market. Show the price ceiling in your graph. Indicate what will happen to quantity demanded and quantity supplied of health over time ? c) would a shortage or surplus result ? I llustrate in your graph.
Make the business case why healthcare providers should advocate for expansion of insurance coverage for the poor
What provision of federal law makes employer-based health insurance even more attractive to most EMPLOYEES who receive it than just the value of the premium? O Insured employees can take a tax deduction for the entire amount paid to doctors for the employee's treatment even if much of the cost was paid by insurance. Employer-based health insurance offers much better coverage than other types of insurance Employer-based health insurance offers lower copays and deductibles than other types of insurance The value of health insurance paid by an employer is not taxable income for the employee
BN7.1 Explain the First Welfare Theorem & why it does not apply to Health Care Markets?