Exam 4: Health Insurance: Financing Medical Care

Patient cost sharing is now a permanent feature in almost all health insurance contracts. The insurers introduce patient cost sharing with the goal to

A sudden escalation in the utilization rates and, correspondingly, medical expenditures for treatment of ischemic heart disease (a procedure usually covered by insurance) would immediately

A company with 1,000 employees has the following experience this year 25 hospitalizations at $\$ 5,600$ each. 24 births at $\$ 10,000$ each. 4.1 physician visits per employee at $\$ 60$ per visit. 2.4 prescriptions filled per employee at $\$ 25$ per prescription. The actuarially fair premium for this company

Many employers in the U.S. pay significant amounts towards their employees' health insurance premiums. If the benefit cost per full-time employee rises (e.g. when the insurer raises premiums) and the employer does not want the total cost of the employees' compensation (wage + benefits) to rise, all of the following would represent valid options for the employer to consider, except

Sahar does not have medical insurance and pays all her medical bills out of pocket. Her demand schedule for chiropractic visits is shown in the table below. Price, \ per Visit Number of Visits per Month 0 10 5 9 10 8 15 7 20 6 25 5 30 4 35 3 40 2 45 1 50 0 -With insurance, at the $50 office visit price, how many of the services Sahar demands are worth less to her than what they cost?

The U.S. government subsidizes the private provision of health insurance through employers. Benefits paid to employees are deductible as expenses by firms, but not recognized as taxable income by employees. Consider two employees, Ann and Bob, who work for two different employers. Ann earns $30,000, pays 15% in taxes, and pays $12,000 in premiums for health insurance offered by her employer. Bob earns $40,000, pays 25% in taxes, and has $12,000 worth of medical bills which he has to pay out of pocket, as Bob's employer does not offer health insurance. Which of the following is true about Ann and Bob's incomes?

Sahar does not have medical insurance and pays all her medical bills out of pocket. Her demand schedule for chiropractic visits is shown in the table below. Price, \ per Visit Number of Visits per Month 0 10 5 9 10 8 15 7 20 6 25 5 30 4 35 3 40 2 45 1 50 0 -With insurance, at the $50 office visit price, the welfare loss to society due to moral hazard (if any) in Sahar's case is

Sahar does not have medical insurance and pays all her medical bills out of pocket. Her demand schedule for chiropractic visits is shown in the table below. Price, \ per Visit Number of Visits per Month 0 10 5 9 10 8 15 7 20 6 25 5 30 4 35 3 40 2 45 1 50 0 -Sahar responds only to her out of pocket payment when deciding how many office visits to make. Assume Sahar obtains insurance coverage which requires her to pay 20% of the price per visit. At a price of $50, how many office visits will Sahar make?

Consider a hypothetical large university which employs thousands of employees as in the Cutler and Reber (1998) study of Harvard University's health insurance coverage. Faced with increasing health insurance costs, the university has cut its subsidy to employees and instituted a "new" cost schedule. There are two plans, the HMO and the PPO. The PPO provides relatively more generous choices and coverage. Type Cost PPO 8,000 HMO 6,000 Employee Payment Old New 2,400 4,800 1,800 2,400 Enrollment Year 1 Year 2 16\% 13\% 84\% 87\% Use the concept of adverse selection to explain how the enrollment changes from year 1 to year 2 could cause the university to abandon the PPO by year 3 .

Social insurance