Question 3: Consistent with Figure 12.1, assume that the FFS price was $100 per visit and the average patient made eight visits per year. A competing managed care organization came in and charged $80 per visit, providing seven visits per year. (a) Calculate the change in total expenditures. (b) Graph the FFS and the managed care market equilibria as was done in Figure 12.1. What do our findings suggest about demand for managed care compared to demand for FFS care?
Question 3: Consistent with Figure 12.1, assume that the FFS price was $100 per visit and the average patient made eight visits per year. A competing managed care organization came in and charged $80 per visit, providing seven visits per year. (a) Calculate the change in total expenditures. (b) Graph the FFS and the managed care market equilibria as was done in Figure 12.1. What do our findings suggest about demand for managed care compared to demand for FFS care?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question 3: Consistent with Figure 12.1, assume that the FFS price was $100 per visit and the average patient made eight visits per year. A competing managed care organization came in and charged $80 per visit, providing seven visits per year. (a) Calculate the change in total expenditures. (b) Graph the FFS and the managed care market equilibria as was done in Figure 12.1. What do our findings suggest about demand for managed care compared to demand for FFS care?
Transcribed Image Text:b s th oong i D = Demand (fee-for-service)
Managed Care
%3D
Dm = Demand (managed care)
%3D
owD
Total expenditures
(fee-for-service)
Pm
Price (fee-for-service)
shjeme
TEmbooD
Price
Price (managed care)
Total expenditures
(managed care)
2OMH Ieubivibni pnilab
booa OMH
bitw adnde a
RA IS DIG
0 Toi Quantitylog Qm Qf
Figure 12.1 Treatment and Expenditures under Managed Care
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