Part I: Analytical Exercise: Be sure to show work to be eligible to receive partial credit.

Obamacare & Health Care Demand (30 points)

i.(5 points) Before the ACA passed, PCP visits cost $20 for those with insurance.(Assume no demand from those without insurance).Below is a table of demand.

Price

Quantity

$100

50M

$80

100M

$60

150M

$40

200M

$20

250M

$0

300M

Please draw a demand curve.What is the demanded quantity?

ii.(5 points) In 2014 the ACA (Obamacare) went into effect.One of requirements was that for those with insurance, the cost of a preventive care visit should be $0.What is the change in demand for PCP visits as a result of this change?

iii.(5 points) In addition, in 2014 Medicaid and the Individual markets were expanded resulting in approximately 30M more individuals with insurance.Uninsured people had 0 demand before. These newly insured individuals have the same demand as the prior individuals what is the new demand?Please graph your answer on the same graph as part i.Label this demand line D'

iv.(5 points) Draw the PCP supply curve detailed in the data below.

Price

Quantity

0

0

20

50

40

100

60

150

80

200

100

250

If price was set in the market and not by law, what is the equilibrium point between this supply and D' (the demand from part iii), the expanded demand curve?

v.(10 points) However, the price IS set in law at $0 for patients.Assume the payment to physicians is set at $100.What amount is supplied?What amount is demanded?What is the resulting market condition?