Instructor's Manual IMChap009

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1、Part3–PublicExpenditure:SocialInsuranceandIncomeMaintenanceChapter9–TheHealthCareMarketBriefOutline1.What’sSpecialaboutHealthCare?a.TheRoleofInsuranceb.TheRoleofRiskPoolingc.AdverseSelectionintheHealthInsuranceMarketd.InsuranceandMoralHazarde.OtherInformationProblemsintheHealthCareMarketf.E

2、xternalitiesofHealthCare2.DoWeWantEfficientProvisionofHealthCare?a.Paternalismb.TheProblemoftheUninsuredc.HighHealthCareCostsAnswerstoEnd-of-ChapterQuestions1.a.Concernwithhealthcarecostsdoesnotmeanthathealthcareisnot“good.”Economistsdonotcareaboutthecostofhealthcareperse.Rather,theissueisw

3、hethertherearedistortionsinthemarketthatleadtomorethananefficientamountbeingconsumed.b.Itmakesalotofdifferencehowmoneyisspent.Onecancreateemploymentbyhiringpeopletodigditchesandthenfillthemup,butthisproducesnothingusefulinthewayofgoodsandservices.Thus,employmentinthehealthcaresectorisnotdes

4、irableinitself.Itisdesirabletotheextentthatitisassociatedwiththeproductionofanefficientquantityofhealthcareservices.2.Thoseemployeeswholeaveajobandchoosetomaintainthehealthinsuranceeveninthepresenceofthehighpremiumsarelikelyindividualswhoneedhealthinsurancebecauseofpoorhealth.Thisadversesel

5、ectionviolatesriskpoolingbyeliminatinglowriskpeoplefromtheinsurance,leadingtolossesbytheinsurancecompanies.3.Thissituationcanbeexplainedbytheconceptofmoralhazard.Thetrafficlightscreateddangerousbehavior,likespeedinguptomakeitthroughalight,whichmadeaccidentsmorelikely.Removingthelightsforced

6、driverstobemorecautiousatintersectionstoavoidaccidents.4.Iftheelasticityofdemandformedicalcareis-2.3,a20percentcoinsuranceshoulddecreasethedemandforcareby46percent.Thisshouldincreaseefficiency,becauseazeropriceleadstooveruse–useofcarewherethebenefitofthecareislessthanthecosttoprovidethecare

7、.5.TheTennesseeplanisnotconsistentwiththetheoryofefficientinsurance.Efficientinsurancerequiresthatpatientspayhighoutofpocketpaymentsforhealthcarewithlowexpendituresandlowoutofpocketpaymentsforhealthcarewithhighexpenditures.Here,patientsseemtopaynothingin