Economics 236: Health Economics and Policy Group Assignment 4

Problem Assignment:

Here are some critical questions for our class discussion regarding Insurance. For each one of the following questions you should be able to communicate to an audience all important relevant information in a well-organized and concise way. Make sure that you are ready to present enough detail and write the equations on the board.

Please use your textbook's notation: risk premium r, price of medical care pm, quantity of medical care m, coinsurance rate c, loading fee L, insurance premium R, tax rate t, etc.

1) Write down mathematically, and explain how much consumers are willing to pay for health insurance.

2) Write down mathematically, and explain how much health insurance companies would like to collect from beneficiaries to stay in business.

3) Write down mathematically, and explain what has to be true for the beneficiaries to get the insurance.

4) Write down mathematically, and explain what changes because of the preferential tax treatment in this country.