Suppose the government imposes a Wellness Tax τ > 0, on robust and frail types but collects on this tax only when they are healthy (that is, there is no tax if they turn out to be sick). Will a separating equilibrium still be possible? Draw a version of the Rothschild-Stiglitz diagram to support your answer
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Suppose the government imposes a Wellness Tax τ > 0, on robust and frail types but collects on this tax only when they are healthy (that is, there is no tax if they turn out to be sick). Will a separating equilibrium still be possible? Draw a version of the Rothschild-Stiglitz diagram to support your answer
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- Consider a market for health insurance similar to the one below. Image attached Suppose individuals have different health levels H, where H is distributed uniformly between 0 and 9. The marginal cost of medical care depends on an individual’s health H, and is characterized by the function MC=1000+1000*H (notice that a higher value of H corresponds to a sicker person, with higher marginal costs, so the left edge of the graph corresponds to the sickest person with H=9, and the right edge of the graph corresponds to the healthiest person with H=0). Individuals are risk averse, there is a single insurance plan available for purchase (as in the Akerlof model, NOT the R-S model), and individuals have utility functions for this insurance plan that result in a risk premium equal to RP=1000*H. Now suppose an individual insurance mandate is imposed that forces all consumers to purchase insurance or else pay a tax of $3000. a) What will the insurance mandate do to the equilibrium price of…Suppose you have an insurance plan in which you pay the market price for medical care until you meet a deductible of $1,000, after which you have a coinsurance rate of .20. Answer parts a and b assuming your inverse demand curve for medical care is P = 400 – 10Q and the market price for medical care is $200 per unit.a) Graph the price line and your demand curve. On the graph, label the values of the x and y intercepts of the demand curve, the quantity where you meet the deductible, the horizontal sections of the price line, and the point(s) where the demand curve intersects the price line.b) Find the number of units of medical care that you will demand. Show all calculations that youperformed in your analysis.I do not need the graph, just help with the explanation. Thank you:) A tax on healthy people. Consider the basic Rothschild-Stiglitz model with asymmetric information and robust and frail customers. Suppose the government imposes a Wellness Tax τ > 0, on robust and frail types but collects on this tax only when they are healthy (that is, there is no tax if they turn out to be sick). Will a separating equilibrium still be possible? Draw a version of the Rothschild-Stiglitz diagram to support your answer.
- The following is an excerpt from "The Labor Market Effects of Rising Health Insurance Premiums," by Katherine Baicker, Amitabh Chandra. If workers in a certain sector of the economy or those who are married are systematically more likely to have different levels of unobservable characteristics that affect health insurance premiums, then such a correlation is possible. This problem is identical to the standard endogeneity problem in program evaluation, where receipt of the treatment is correlated with unobservable characteristics of the person receiving treatment. A solution to this problem is to instrument for imputed premiums using variables that are uncorrelated with εi and mi but are correlated with imputed health insurance premiums. In our analysis we use state‐level, per‐capita medical malpractice payments as an instrument for imputed premiums. In other words, in order for malpractice payments to be a valid instrument for health insurance premiums, it must be the case that…Suppose that Hubert, an economist from an AM talk radio program, and Kate, an economist from a school of industrial relations, are arguing over health insurance. The following dialogue shows an excerpt from their debate: Kate: A popular topic for debate among politicians as well as economists is the idea of providing government assistance for health benefits. Hubert: I think it is oppressive for the government to tax people who take care of themselves in order to pay for health insurance for those who are obese. Kate: I disagree. I think government funding of health insurance is useful to ensure basic fairness. The disagreement between these economists is most likely due to (DIFFERENCE IN SCIENTIFIC JUDGEMENT, DIFFERENCE IN VALUES, DIFFERENCE BETWEEN PERCEPTION VERSUS REALITY) . Despite their differences, with which proposition are two economists chosen at random most likely to agree? A. Employers should not be restricted from outsourcing work to foreign nations.…10. Consider the following figure of the Rothschild-Stiglitz model: Sick ZPL H A ZPL L Healthy a) Is (A, B) a separating or pooling equilibrium? b) Suppose the economy has 90% low risk types and 10% high risk types. Draw the average zero profit line. c) What happens to the contract (A, B)? Explain why.
- Show how a consumer would choose between medical care and health(y) behavior activities using the graphical representation of the consumer choice model (assume that “amounts” of healthy behavior have “costs” or prices). How might health education affect this choice? What if medical care becomes more productive (more health benefit per “unit” of medical care consumed)? What if medical care becomes cheaper? Explain in terms of the model (i.e. what does it change in the model).Suppose that Edison, an economist from a college in Pennsylvania, and Hilary, another economist from a nonprofit institution in the Midwest, are both guests on a popular science podcast. The host of the podcast is facilitating their debate over health insurance. The following dialogue represents a portion of the transcript of their discussion: Hilary: A popular topic for debate among politicians as well as economists is the idea of providing government assistance for health benefits. Edison: I think it is oppressive for the government to tax people who take care of themselves in order to pay for health insurance for those who are obese. Hilary: I disagree. I think government funding of health insurance is useful to ensure basic fairness. The disagreement between these economists is most likely due to Despite their differences, with which proposition are two economists chosen at random most likely to agree? Minimum wage laws do more to harm low-skilled workers than help them. Tariffs…True or false? According to the Grossman model, if a new drug were discovered that eliminated the steady deterioration of health that accompanies aging – but does not eliminate sudden events like heart attacks or being hit by a bus – then the demand for jelly donuts, french fries, and physical activity in the presence of buses would decline. Justify your answer.
- While the Lindahl model (equilibrium) can be analogous to the market for private goods, they have interesting differences. How do we interpret Q1 in the diagram? What about S?The following is an excerpt from "The Oregon Experiment- Effects of Medicaid on Clinical Outcomes," by Baicker et al. (2013). Fill in the blank identifying the method used in this paper given the description in the paragraph (I've given you a hint on the key points by italicizing a few phrases): "Adults randomly selected in the lottery were given the option to apply for Medicaid, but not all persons selected by the lottery enrolled in Medicaid (either because they did not apply or because they were deemed ineligible). Lottery selection increased the probability of Medicaid coverage during our study period by 24.1 percentage points (95% confidence interval [CI], 22.3 to 25.9; P<0.001). The subgroup of lottery winners who ultimately enrolled in Medicaid was not comparable to the overall group of persons who did not win the lottery. We, therefore, used a standard______ _approach... to estimate the causal effect of enrollment in Medicaid. Intuitively, since the lottery increased the chance…10. Consider the following figure of the Rothschild-Stiglitz model: Sick ZPL L ZPL H A B H E Healthy a) Is (A, B) a separating or pooling equilibrium? b) Suppose the economy has 90% low risk types and 10% high risk types. Draw the average zero profit line. c) What happens to the contract (A, B)? Explain why.