If all health insurance is private and the market for insurance is competitive, how many families are covered, what is the premium, and what is the deadweight loss created?

The marginal cost of health insurance is a constant $8,000 a year and the figure shows the marginal ben­efit and willingness and ability to pay curve. Suppose that the marginal social benefit of insurance exceeds the willingness and ability to pay by a constant $2,000 per family per year.

Transcribed Image Text:

FIGURE 16.6 12 10 8 D = MB 30 40 10 20 50 Quantity (millions of families insured) Premium (thousands of dollars per year) 2.