Questions and Answers of The Economics Of Health And Health Care

Defi ne price elasticity of health care demand.(a) Suppose the price elasticity of health services is –0.4. What will happen to the share of health care expenditures, given a 10 percent decrease in
For more advanced students, Table 21.2 provides data for at least rudimentary estimates of income elasticity of health care expenditures. Estimate a regression equation of the following form:Log
From the data in Table 21.2, estimate a regression equation of the following form:Log (Life expectancy at birth) = c + d log (Expenditures per capita)What does your resulting equation say about the
Figure 21.3 shows various types of national health insurance systems.(a) Compare the total expenditures in panels A and B. Which set of expenditures is larger? What determines which will be larger?
Would individual mandates for health insurance be more or less burdensome to the poor than employer mandates? Would lower-income groups be wise to favor one plan over the other?
If the aggregate labor supply curve were highly responsive to increased wages (elastic) instead of very inelastic as we have stated, how would an employer-mandated health insurance plan affect the
How could a single-insurer health insurance system provide additional cost savings over a multiple-insurer system like that in the United States? Price 100 90 85 80 70 60 55 50 40 30 20 10 0 Quantity
What are the major competitive strategies proposed by economists? How, for example, would elimination of the tax subsidy for employer-provided health insurance reduce spending on health care?
What are Health Savings Accounts (HSAs)? Why might HSAs decrease health care spending?What are some problems with the HSA concept? Consider an enrollee in a CDHP with a high-deductible HSA who is
Compare the ACA passed in 2010 with the Massachusetts health plan adopted in 2006 (use the Internet to obtain more details than we have provided in this chapter). Be sure to note the similarities and
Improving the quality of health care is becoming a national priority. Discuss the relative merits of using government regulation versus market forces in improving quality.
Assume that a brilliant health economist has developed a plan that will greatly improve the effi ciency of the U.S. health care system by putting everyone’s medical records on a card with a
Suppose that a monopolistic fi rm faces a downward-sloping demand curve for its product and offers no health insurance to its employees. Let an employer mandate for health insurance be enacted. If
Suppose that a purely competitive fi rm offers no health insurance to its employees. Let an employer mandate for health insurance be enacted. If this causes fi rms’ marginal costs to increase, will
Suppose that a monopolist faced the following demand curve for its goods. Its marginal cost per unit of production is 50, and it faces no fi xed costs(a) Calculate the profi t-maximizing output and
Consider a diagram like Figure 22.3 where states are offered the opportunity to buy into Medicaid under the ACA for a 9:1 match.(a) Mark an initial level of expenditures if the state is spending $20
Consider Figure 22.4 where health insurance and other goods are measured in dollars spent. Suppose Adam spends no money on health insurance, Steve spends 6 percent of his income on health insurance,
Consider two households. They have the same incomes and face the same prices.Household H tends to be healthy and household U tends to be unhealthy. Suppose that two insurance plans are
Use the demand–supply framework in Figure 22.5 to explain how increased cost sharing could lead to lower utilization and spending on health care. Price P P P D D S S E Initial Spending Reduced
Suppose that the “greasy food” sector of the economy did not offer health insurance before the passage of the ACA, and “greasy food” workers were not interested in health insurance.(a) Draw
(Advanced) Individual or class project. For students with computing and statistical skills, the MEPS database is available at www.meps.ahrq.gov/mepsweb/. For an individual or class project, try to
Many students smoke, drink alcohol, or ingest other addictive substances, such as caffeine (in coffee, tea, or soft drinks). How do the addiction models that are presented relate to students’
Do cigarette and alcohol ads you have seen contain primarily informative content or persuasive content? What consequences would you predict from your fi nding?
Someone says: “The advertising elasticity of cigarette demand may be small, but it is big enough to warrant policy to ban cigarette advertising.” What would “big enough” mean in this context?
What does the evidence on the effects of the partial U.S. ban on cigarette advertising suggest about the relative effectiveness of cigarette advertising versus antismoking advertising?
How does the responsiveness to cigarette advertising and price differ between youths and adults? Why is this important?
Explain how it is possible to advertise too little or too much.
Suppose it takes considerable time for the large majority of cigarette smokers to become fully informed about the fact that cigarette prices have risen all over. How would this matter to the
How would an excise tax hike in Kansas be helped or harmed in its attempt to curb smoking among Kansans if the neighboring states (e.g., Missouri, Nebraska) did not also hike their cigarette excise
When all costs are considered, which public policy tool for curbing the consumption of bads would be the most costly to administer for a given amount of consumption reduction among consumers?
The analysis accompanying Figure 23.3 investigates the impacts of an increase in cigarette prices. Use the fi gure to show both the short-run and the long-run impacts of a cigarette price decrease.
If the elasticity of aggregate cigarette demand with respect to advertising were 0.15 in absolute value, by extrapolation what effect on cigarette consumption would be caused by a 10 percent
Suppose the price elasticity of cigarette demand is 0.4. If we increased the prices of cigarettes by 50 percent, what would we expect to happen to the quantity purchased? To total expenditures on
In the discussion on rationales for intervention in markets, we note that Manning found external costs of $0.33 per pack of cigarettes.(a) Draw a supply and demand diagram, and graph Manning’s
Using Manning’s estimate of external costs of $0.33 per pack of cigarettes:(a) Calculate the new market price for cigarettes using a demand elasticity of 0.25.Would this be economically effi
If you were part of the City Council, what would you propose to increase community social capital?
From a cost/benefi t standpoint, given that these are benefi ts to community social capital, what are the costs?
Why would an increase in average community social capital, Sˆ, improve the payoff to the individual’s social capital, S?
Do the signifi cant correlations between Sˆ and per capita mortality rates prove the Social Capital and Health Hypothesis? Why or why not?
Reverse causality means that H implies S. Suppose this were the only result from these studies. How would community policy need to change from those based on S implies H?
Describe public health policies to reduce smoking levels in the community. What, if anything, would you choose?
Consider the parameters R, Sˆ, S, w, and C(I) in equation (24.1). Find and explain the effect of an increase in each one. II S.R(S)-w-C(I) (24.1)
For Table 24.1, suppose you think that you omitted a relevant variable, physicians per capita. Would this harm your results for Sˆ or H? Explain your view. Table 24.1 (Model 1) The Effect of
Suppose you moved into a neighborhood and that as time passes you found that your neighbors were not only friendly but dependable. How would you alter your risky behavior?Explain.

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