Reference no: EM132157302

Several years ago, Congress passed legislation mandating that, if a medical insurance policy covers any hospital labor expenses, then the insurer must pay for at least two days of hospital expenses incurred by an insured woman who gives birth. Explain why the law is economically equivalent to a tax on medical insurance plus federal expenditures on hospital stays for privately insured women giving birth. Explain how such a tax-and-spending program would differ from the law in terms of effects on the government budget.