Using demand and supply model answer the following questions. Why Ohio State Uni

Question

Using demand and supply model answer the following questions.

Why Ohio State University's President who studied at Stanford University and has been a physician and professor of ophthalmology eams ($1m) substantially less than Ohio State University's football coach who cams $óm, and holds a degree in psychology and sports administration from University of Cincinnati and Ohio State University respectively.

Strong economic growth results in higher demand from home buyers. However, the increase in price of beach front properties is substantially higher than the increase in price of other types of housing. Why is that?

EpiPen is an auto-injector used to treat allergy reactions. Its price has gone up from $57 in 2007 to about $500 in 2016. How the company selling EpiPen gains profits (revenue - costs) by increasing its prices by about 8 times. Why, the outcome may be different for an establishment like a college if it was to raise its annual ruition from $7k/year to $40k a year.

BONUS: Two important elements of the Affordable Care Act are that it made it

illegal for insurance companies to decline insurance to people with pre-existing conditions.

compulsory for everyone to buy insurance or face a fine.

a) How may these provisions address problem of adverse selection in health insurance markets.

b) How deductibles address moral hazard in health insurance market?

c) Describe the shortcomings of the current system of health care provision in the U.S. and detail a system of health care, that can reduce costs and increase access to health care for patients in the U.S. for patients.

Explanation / Answer

HEALTH INSURANCE

ans( a) health insurance play a vital role in our life government should take some serious step that every individual is accustomed of taking health insurance for himself as well as for his family.

because people who lack health insurance are unable to obtain timely medical care, they have a 40% higher risk of death in any given year than those with health insurance, according to a survey published in the American Journal of Public Health. There were 45,000 deaths associated with lack of health insurance.

ans (b) MORAL HAZARD IN HEALTH INSURANCE MARKET

When people have insurance, they tend to be less careful about their health status increasing their demands of health care service.

The patients with insurance will demand more health care resources than they actually need, which will cause a welfare loss.

Assume that marginal cost is constant. The amount of health care that should be provided is Q1, where marginal cost equal to marginal benefit. However, because of the excess demand of patients, Q2 will be provided. And the shaded area represents welfare loss.

ans (c)

The health insurance in US can be divided into two parts, one of which are private insurance consisted of employment-base and direct-purchase insurance, the other by government.

The government programs include 9 departments () which generally cover the elderly disabled, children, veterans and some of the poor.

In US, the government administrate social insurance which is called Medicare, providing insurance for people 65 or older, or people of any age with certain disabilities or meet some certain criteria.With this policy, most of the high risk people will be taken out the health insurance market by the government which reduce the adverse selection problem to some extent.

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