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) $6,000 per family. $4,000 per family. $8,000 per family. $2,000 per family. 12 10 6 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 subsidize health insurance, what subsidy will achieve the efficient coverage?
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) $6,000 per family. $4,000 per family. $8,000 per family. $2,000 per family. 12 10 6 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 subsidize health insurance, what subsidy will achieve the efficient coverage?
Chapter6: Population Health
Section: Chapter Questions
Problem 2QAP
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