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In a provocative article Steve Levit writes: "My model for health care is very simple. On January 1 of each year, the British government would mail a check for 1,000 pounds to every British resident. They can do whatever they want with that money, but if they are being prudent, they might want to set it aside to cover out-of-pocket health care costs. In my system, individuals are now required to pay out-of-pocket for 100 percent of their health care costs up to 2,000 pounds, and 50 percent of the costs between 2,000 pounds and 8,000 pounds. The government pays for all expenses over 8,000 pounds in a year"

Read the full story at:

http://freakonomics.com/2014/05/19/a-freakonomics-proposal-to-help-the-british-national-health-service/

(a)What is the key asymmetric information concern that may lead to these types of proposals?

(b)Outline the advantages and drawbacks of such proposal vis--vis Obamacare.

(c)Who is more likely to benefit or loose from each of the options?