ProblemSet5(1)

7.

How is the moral hazard problem relevant to the health care market?

What would explain why moral hazard might not occur after the large gains in health insurance coverage?

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…

Find evidence that can explain how the difference in educational attainment influences the health of people who reside in that country. Here, you are identifying a determinant of health and at least one risk factor. Summarize what you found and justify the determinant of health and risk factor. (cite in text citation) 4 sentences or more.

Economics Use the following information to determine the costs to you and/or to the insurance company for the following occurrences:1) You have $500 per person Wellness Benefit.2) You have a $500 İndividual Deductible and your family (spouse and children) has a $500 Family Deductible.3) You have a $10,000 annual Maximum Family Out-of- Pocket expense provision.4) Once you have met your Individual or Family Deductible, your insurance will pay 80% of the expenses and you will pay 20% as your co-pay.Unless the occurrence is a Wellness expense, you and/or your family have to meet their deductibles first before insurance will pay anything. Example:Assume that you have met your deductible, and you go to the Emergency Room for a large cut on your shin which required cleaning, 20 stitches, a tetanus shot, and antibiotics. (80/20 plan)Total Charges = $2,500 totalYour Responsibility = $2,500*.20 = $500 (goes toward your Max Out of Pocket)Insurance Responsibility = $2,500*.80 = $2,000 Question:…

1. If you are trying to use a RDD setup to evaluate the effect of health insurance on health, and you qualify for a health insurance subsidy if your family income is below $20,000.   What's the running variable? What's treatment, and what's the outcome?

If the demand curve is steeper for particular health services the moral hazard is less ? True or false  Explain briefly.

Here is what occurs in the following scenario: Bill has an income of $50,000 and has a probability of remaining healthy of 70%. If he is not healthy, Bill has the following projected medical costs that would be paid 100% by insurance: medications = $400, medical office visits = $1,600. What is the actuarially fair health insurance premium Bill should pay? a. $120 b. $480 c. $600 d. $1,400 e. $15,000

if a patient pays his surgeon before she performs the surgery, is this adverse selection or moral hazzard

How does Health Economics relate to individual Health Paracetamol 2021 2022 Quantity Demanded 1000 packets 800 packets Price 4 pounds 5 pounds

This is a Microeconomics problem. Explain how adverse selection can cause undesirable outcomes in a health insurance industry over time.

3.

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. Time Periods Pre-2005 Post-2005 $1000 $1400 $1500 $1700 State State Beta State Gamma decreased: $400 increased; $200 decreased: $200 increased; $400

Briefly explain what it means for information to be asymmetric. a. What is Moral Hazard? b. Identify and briefly explain three methods that insurance companies could use to off-set the moral hazard associated with their industry. c. What is Adverse Selection?

On Asymmetric Information and Agency What is a reputation good? What are examples of reputation goods outside the health care sector? Show what Pauly and Satterthwaite predict will happen to the demand curve for health services as a result of an increase in the number of providers.

What is the importance of learning health economics as a health practitioner? what are the important things to know about heath economics?

You have been recruited as an expert in health economics to recommend what is the best therapy for a group of patients. In the image below you will find the decision tree showing the probabilities for different health states and outcomes for patients undergoing two possible treatments, No drug therapy and Drug therapy. Based on the expected cost, which therapy would you recommend as the least expensive? Explain how you arrived at your recommendation and show your calculations the space provided. No drug theraphy ? Drug theraphy ? HEALTH STATES PROBABILITIES Remain in Good Health 0.5 Develop disease A 0.2 Develop disease B 0.2 Die 0.1 Remain in Good Health 0.53 Develop disease A 0.16 Develop disease B 0.22 Die 0.09 OUTCOMES (Costs) $0 $400 $300 $200 SO $800 $500 $0

Suppose, if ill, that Fred’s demand for health services is summarized by the demand curve Q = 50 − 2P , where P is the price of services. How many services does he buy at a price of $20? Suppose that Fred’s probability of illness is 0.25. What is the actuarially fair price of health insurance for Fred with a zero coinsurance rate? If the insurance company pays Fred’s entire loss, will the insurance company offer him insurance at the actuarially fair rate? Why? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

Describe the challenges that adverseselection and moral hazard pose for insurance.