Pipes - Government prevention programs don't reduce health care costs
Yet government increasingly seeks to regulate personal behavior in the name of reducing medical expenses. She warns: "Today's soft-serve despots are yesterday's prohibitionists."
Pipes - We don't need more government to insure poor Americans
In fact, genuinely poor Americans are covered by existing programs, though design flaws — such as low reimbursement rates — discourage doctors from accepting Medicaid patients. "The last thing these people need is more and larger government health care programs — which after four decades of trying, have proven to be incapable of providing a level of care that's comparable to what's available through the private sector."
Pipes - Importing drugs would not reduce health care costs
mporting pharmaceuticals from government-run systems really is importing drug price controls rather than drugs. Anyway, Ms. Pipes notes, when people claim medicines are cheaper overseas, "they're referring to a very narrow category — brand-name drugs that have been approved and price-controlled by foreign governments." Even in the best case, the practice isn't going to save much money.
Pipes - Having government require that all people buy insurance will not result in universal coverage
Ms. Pipes reviews the dismal experience of states that have proceeded down this road, urging advocates at least to "be honest about the sacrifices required: Higher taxes, forced premium payments, one-size-fits-all policies, long waiting lists, rationed care, and limited access to cutting-edge medicine." This is no health care answer for America.
Price Elasticity of Demand
A measure to show responsiveness of the quantity demanded of a good or service to a change in its price.
Income Elasticity of Demand
A measure of the relationship between a change in income and a change in quantity of a good demanded
Time Cost of Receiving Health Care
The travel time elasticity of demand is equal to the own-price elasticity of demand. Influence the decision to acquire medical care.
Economies of scale
The increase in efficiency of production as the number of goods being produced increases. Exist when the average cost of production decreases with the quantity of output.
6 families were enrolled in various types of health insurance plans to test the differences in insurance coverage on the demand for medical care. As the level of coinsurance rises, consumers demand less medical care.
Average Fixed Cost
Total Fixed Cost divided by the quantity of output.
The change in total output brought about by a one-unit change in a factor input.
What is the effect of a co-payment on the demand for medical care?
A reduced co-payment results in a movement down the effective demand curve and typically leads to greater quantity of care demanded.
What is the pure premium of an illness?
Are competitive markets allocatively and production efficient? Explain.
Allocatively - the right combination of goods will be produced because the perfect knowledge of firms and consumers.
Production - Goods and services are produced at the lowest possible cost.
Are monopolistic markets allocatively and production efficient? Explain.
No, costs are not minimized and output is restrained.
Neither P > MC (under allocated) Dont produce when P =minATC (Not productively efficient.
A change in total costs associated with a one-unit change in output is:
a. Short-Run Fixed Cost
b. Short-Run Marginal Cost
c. Wage Rate
d. Short-Run Variable Cost
Relative to cash income (or all other goods purchased from cash income) health insurance is effectively subsidized by the govt. because:
a. Health Insurance costs more than employee wages.
b. State Government pay for employer-provided health insurance.
c. Employer-sponsored health insurance is tax exempt.
d. The federal government pays for employer-provided health insurance.
Which of the following is NOT one of the factors that can affect the position of the market demand curve?
a. Input prices and technology
b. Prices of substitutes and complements
d. Number of buyers.
Many sellers possessing tiny market shares, a homogeneous product, no barriers to entry, and perfect consumer information characterizes:
a. Perfect Competition
b. A pure monopoly
c. An oligopoly
d. Monopolistic Competition
Consider the market for hospital services in a large city like NY or Chicago. Would you describe the market as Perf Comp, Mono Comp, or Monopoly. Why?
It is argued the deductibles have a negative effect on the demand for medical care depending on the following 3 factors:
Indicate the relationship b/w it and demand for H.C.
a. Size of Medical Bill
b. Time of the ear in which the medical event occurs
c. Likelihood of requiring more medical care during the calendar year
Discuss the law of demand and factors determining the demand for medical services.
An economic principle stating that the quantity demanded of a good or service is inversely related to its prices.
Factors- Out of pocket, income, time costs, substitutes and compliments, tastes and preferences, profile, health, quality.
What are the effects of coinsurance on the demand for medical care?
Under a coinsurance plan, the consumer pays a fixed percentage of the health care costs and the insurance carriers pick up the other portion.
How does indemnity insurance affect the demand for medical care?
Change in income shifts curve upward.
How do deductibles affect the demand for medical care?
A deductible is likely to have the greatest negative impact on the demand for medical care when the cost of the medical episode is low, the need is late in the year, and the probability of needing future care is slight.
Discuss the results of the empirical studies estimating the demand for medical care. What does this imply about the price/income elasticity of demand
The demand for medical care is inelastic with respect to price. Medical care also appears to be a normal good in that the demand increases with real income.
Discuss the RAND Study and the impact of insurance of the demand for medical care
Health insurance place a major role in determining the demand for medical care. When the level health insurance rises, the amount of medical care increases while price elasticity of demand becomes more inelastic.
Discuss the empirical results regarding the cross price elasticity of demand between outpatient services and impatient services. Terms mean?
Are time costs an important determinant to the demand for health care?
Yes, cost of travel and opportunity cost of time. Demand for medical care falls as time costs increase. (Demand curve to the left)
Employer provided health insurance contributions are tax exempt. Illustrate how this affects the demand insurance.
What is moral hazard? How does it affect the demand for health care? In what ways might it change the behavior of consumers of health care?
Consumers alter behavior when provided with health insurance. People with health insurance may induce consumers to take fewer precautions to prevent illness or to shop little for the best prices.
Law of Diminishing Marginal Productivity (Reason why this law tends to hold in the short run)
As units of an input are used in production, a point is reached at which output increases by a smaller amount.
Explain the reason behind the U shape of the long-run average total cost curve
For small quantities of output, the curve is negatively sloped, for large quantities, the curve is positively sloped.
TP, MP, AP: What are they and how are they related to each other? Draw them
Total Product -
Marginal Product - Change in quantity / Change in hours
Average Product - Average quantity of medical service product with hour
TC, TFC, TVC, AFC, AVC, ATC, MC: What are they and draw them.
Total Cost - TFC + TVC
Total Fixed Cost -
Total Variable Cost -
Average Fixed Cost - TFC / Q
Average Variable Cost - TVC / Q
Average Total Cost - TC / Q
Marginal Cost - Change TC / Change Q
Using a supply and demand analysis, show graphically and explain some of the factors that may have led to rising health care costs in the US from 60-95
Demand for medical care increases because of increases in income, aging population, and change of out of pocket.
All factors shift demand to right causing increase in price and quantity over time.
Cost enhancing technology provide expl for increase HC
Compare and Contrast Perfect Competition and Monopoly in terms of efficiency and equity
PC - Many sellers possessing small market share, homogeneous product, no entry barriers, perfect buyer information.
How does perfect competition differ from monopolistic competition
PC - Large number of small firms, Identical Products, freedom of entry and exit, perfect knowledge of price and technology.
MC - Relatively large number of sellers, differentiated products, easy entry and exit.
Be able to explain and identify short run and long run equilibrium for a competitive industry and for competitive firms.
Be able to explain and identify equilibrium for a monopolist.
MR = MC
A monopolist produces and supplies output quantity Q. Thats the only profit maximizing condition.
From an economic perspective, what is wrong with monopoly? Or why is it inefficient and lead to an inequitable outcome?
A monopoly results in a restriction of output and a mis allocation of resources. A dead weight loss and redistribution of income also occur.
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