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- What is the problem of moral hazard?2. A) Discuss health insurance contract? b)What schemes are applicable for routine medical check-up and diagnostic tests?12. True or False? Medicaid is a U.S. federal- and state- government-sponsored insurance program that provides insurance to people under age 65 whose incomes fall below a certain threshold (level). O True O False
- 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?Give typing answer with explanation and conclusion Suppose that a consumer’s demand curve for medical care is QD = −3P +17 with P = $5. Suppose that the beneficiary obtains an insurance plan through an insurer with a 25% coinsurance rate. Under the insurance arrangement, find the following: (a) Equilibrium price and quantity of medical care? (b) Magnitude of deadweight loss? (c) Cost to the beneficiary? (d) Cost to the insurer?4. Moral hazard and health insurance pricing а. On a graph with fullness of coverage on the x axis and price per unit of coverage on the vertical axis, which corner would you most like to be in? (northeast, southeast, northwest, or southwest) b. Draw the graph referenced in Part A. Assume there is no moral hazard. Indicate where you would be on the graph. Mark this as point b. C. On the same graph as Part B add the set of possible insurance contracts an insurer would offer you after accounting for moral hazard. Indicate your new optimal point. Mark this as point c. d. On the same graph indicate utility loss due to moral hazard. e. Consider a completely risk averse individual that cares only about coverage level. On a new graph (with new utility curves) illustrate where they are in worlds with and without moral hazard. Label these points as above. f. Is this individual's utility loss greater or less than yours?
- 1. Fun with cost-sharing. An important distinction in health insurance is between the list price (PL) and out-of-pocket price (PP) of a medical good or service. The list price is the official price that the provider charges the insurance company, while the out-of-pocket price is the price that the insurance customer faces. Sometimes, the out-of-pocket price depends on the list price. a. Suppose a consumer’s demand for a particular medical procedure is Q = 100 − PP. Draw her demand curve in PL–Q space under the assumption of no insurance and label it D1. You will have to think about the relationship between PL and PP to draw it correctly. b. Now assume the same consumer is fully insured. Think about how this affects the relationship between PL and PP and draw a full-insurance demand curve in PL– Q space. Label this curve D2. c. Finally, assume the consumer is part of a partial insurance plan with a copayment provision. Her insurance pays all expenses above and beyond her copayment of…A consumer’s demand for a medical service is as follows: Q = 100 – P, where P is theout-of-pocket price she actually faces. Assume this medical service has a market price of $70.This consumer is considering four different insurance options: no insurance, full insurance, a 50% coinsurance plan, and a copayment plan with a $25 co-pay Calculate the deadweight loss under each insurance scheme and show iton each graph. What do you observe?2.) Two sources of inefficiency that managed care attempts to address are moral hazard and demand inducement. True or false? a. True b. False
- 3. The figure below demonstrates the moral hazard with insurance coverage. When consumer pays 50% coinsurance at each visit, quantity demanded rises from q₁ to q2 and the price for each visit falls from P₁ to P2 per visit. The shaded area is the deadweight loss due to moral hazard. Price (P) P₁ MC P₂ Number of Physician Visits (Q) Q₂ a A. If coinsurance rate drops from 50% to 0%, how quantity and price per visit will change? Briefly explain. B. Suggest two methods to avoid moral hazard problems in designing insurance benefits. Briefly explain. C. If insurance for very high-cost items (e.g. organ transplant) can be viewed as an income transfer from the risk pool to the affected patients, how will this affect the welfare loss from moral hazard? Brief explain.1. Suppose Jay has been experiencing back pain, and has four options for treatment a. Plot these four treatments on cost–pain reduction axes. Create a cost-effectiveness frontier by connecting potentially cost-effective treatments Treatment Regimen Total cost Pain reduction Do nothing $0 0 units Chair cushion $100 20 units Cortisone injections $700 25 units Acupuncture $1000 50 units 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.a. Sketch a graph of what the insurance market equilibrium looks like if health status is public information and there are no regulations on prices other than the fact that the insurance market is perfectly competitive.
