Chapter 1

1. What is meant by a loading fee when we consider the price of an insurance policy? Why is the loading fee a higher proportion of the premium when people choose low deductibles?

2. What are advantages and disadvantages of community rating of health insurance? Consider both equity and efficiency.

Chapter 2

1. What does the elasticity of substitution illustrate?

2. Explain the difference behind the U-shaped long run average cost curve.

3. Suppose the licensure requirements become more stringent so that fewer physicians will be able to practice medicine. What would happen to the supply curve for physician services? Explain.

Chapter 3

1. What is the economic reason for the high ratio of specialist to general practitioner in the United States compared to other countries?

2. The American Medical Association (AMA) has often been through to behave like a trade union in restricting the supply of physicians in order to keep earnings high. What evidence is there that the AMA has acted this way?

Chapter 4

1. How would you characterize the effect of the United States health insurance system on healthcare technology changes from 1960 to 1990?

Chapter 5

1. Suppose that the supply curve of healthcare series is perfectly inelastic (i.e vertical). Analyze the impact of an increase in consumer income on the market price and quality of services. Now, suppose that the demand for healthcare services is perfectly inelastic (i.e vertical), while the supply curve is upward sloping. Analyze the impact of an increase in input prices on the market price of healthcare services.

Questions

1. Should health insurer's and managed care companies profit be capped?

2. Is it appropriate for providers to create demand for services in the marketplace?