Reference no: EM133844240

Question

1. In 1988 Medicare cut the payment for open heart surgery by 2 to 15 percent, For thoracic surgeons, who perform open heart surgery, what is the income effect of this cut? What is the substitution effect induced by this fee cut, again for thoracic surgeon? What happens when the income effect dominates the substitution effect? Does an insurer realize savings from a fee cut when the income effect dominates the substitution effect? Explain your answer, suppose you were director of your country's national health insurance program. What public policies would you implement if you knew that the income effect dominates the substitution effect?( frank sloan)

2. Suppose country A adopts a public health insurance plan that provides coverage for various types of personal health care services, with moderate demand side cost sharing. Meanwhile, country A also allows private firms to offer health insurance for uncovered services and to pay for cost sharing of covered services;(1) indemnity benefits, that is, the insurance policy pays fixed dollar amount for a particular type of service and (2) service benefits, that is, that the insurance policy pays a specific percentage of the out of pocket price. What is meant by the term private insurers free ride on public plans, which type of private health insurance is more likely to become a free rider, indemnity or service benefit plans? Explain. Which type of private health insurance, indemnity or service benefit plans, can provide better protection against the risk of financial loss when insured sick? (Frank Sloan)

3. Compare differences between public health insurance and private health insurance on the following dimensions; The decision to adopt new medical technologies, Premium setting, Administrative expense, Satisfying differences in consumer preferences (consumer preference heterogeneity), Providing preventive substances.