write four paragraphs answering following questions:
1.Explain why supply induced demand is so prevalent within the health care industry compared to other industries. What is the connection between this and moral hazard?
2.Despite most evidence showing that health care models like the Beveridge and Bismarck models provide better health care at a lower cost, why do you think the United States faces so much reluctance towards adopting a similar system? (I don’t know that there is a single right or wrong answer to this question but I am interested in what you have to say about it.)
3. Consider an insurance policy with a 50% coinsurance rate and an annual deductible of 500 dollars. The insurer is considering changing the deductible to 1000 dollars. What types of behavioral changes is this likely to incentivize or disincentivize? If the goal of the policy change is to reduce expenditures, do you think it will have a significant impact? (why or why not?)
4.Consider two possible health insurance policies. Policy 1 is a coinsurance policy that covers 2/3 of any health care expense but has no upper limit to individual spending (i.e. an infinite deductible). Policy 2 is a catastrophic insurance policy that only covers very expensive injuries or illnesses but covers 100% of those costs.
(a) Which of these policies is likely to be more effective at providing consumption smoothing for insurees?
(b) Based on the findings in the RAND health insurance experiment, which policy is most likely going to reduce expenditures on health care?
(c) Would you expect one policy to provide a higher quality of health than the other? (Why or why not?)