Reference Book: Health Economics by Jay Bhattacharya, Timothy Hyde& Peter Tu PAR

Question

Reference Book: Health Economics by Jay Bhattacharya, Timothy Hyde& Peter Tu PART 2: TRUE-FALSE (4 pts each): Please indicate whether the statement is true or false. Explain your reasoning for your answer (in 2-3 sentences if possible). Right answer without an explanation will receive only 1 out of 4 points. 7. If inpatient and outpatient care are substitutes, then health insurance availability could 8. Generally, hospitals competing to attract emergency room patients since this type of 9. A risk averse and rational individual choose full coverage if insurance is fair. T/F? Why? reduce hospital admissions through better outpatient care T/F. Why? hospital service is the most lucrative one. T/F? Why? 10. The literature on the effect of competition on hospital quality indicates: competition increases quality when prices are set administratively. T/F Why? 11. In health insurance markets asymmetric information between agents leads to adverse selection. T/F? With an example, explain how asymmetric information in health insurance context does or does not lead to adverse selection. 12. Universal health insurance coverage solves adverse selection problem. T/F? Why? 13. Assuming health problems can emerge at any age, private markets can solve adverse selection problem. T/F? Why? 14. Without an individual mandate, non-group insurance market (Health insuranc marketplace) has greater chance to experience an adverse selection death spiral. T/F? Why? 15. Advantageous selection can be one of the reasons of why we do not observe moral hazard in health insurance markets. T/F? Whyi? 16. So far, researchers observed predictions of asymmetric information models in all types of in urance markets. T/F? Why? 7. A fair and partial insurance is more preferable as it maximizes risk averse individual's utility and decreases overall healthcare costs in the society. 1/F? Why? In a pooling equilibrium, the insurance company offers two contracts that results in high-risk and low risk types choose different contracts. T/F? Why? 21. Economists explain desire to reduce uncertainty by diminishing marginal utility fronm income. T how y of diminishing margin al utility. Show economists explain risk averse behavior using diminishing marginal utility the graph

Explanation / Answer

7) true

Inpatients are patients who get treatment being admitted in the hospitals and outpatients are patients who do not get admitted and get treatment.

When these are substitutes results are same whether the patient is treated being admitted or not. So people like to enjoy the comfort of home and get the treatment done.

8) true

In the united states hospitals are using emergency department advertising to attract patients. Emergency department is the most profitable department and patients can pay high amount to avoid emergency waiting time.

9) False

A risk averse individual does not like risk and can buy full coverage insurance but a rational individual takes overall cost and benefits of buying the insurance. So it is not certain that he would buy full coverage.

10) True

Hospitals can compete with prices but when prices are set administratively, they can compete by improving quality.

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