Hello, dear friend, you can consult us at any time if you have any questions, add WeChat: daixieit

ECN 132 Summer Session II – Practice Problems

1. Do socioeconomic differences in health exist only in countries like the United States where there is no universal health care, or also in those countries where there is universal healthcare? Briefly explain.

2. Suppose Drug B costs $30,000 to produce and the extended life expectancy from taking Drug B is 1.5 years. If the extended life expectancy from taking Drug A is 3 years and the ICER (incremental cost-effectiveness ratio) of using Drug A over Drug B is $5,000 per year of extended life expectancy, how much does Drug A cost to produce?

3. What are the three factors that are necessary for moral hazard to exist?

4. How did the increase in premiums for Harvard employees (the study we discussed in class) provide evidence for adverse selection in health insurance? Briefly explain.

5. Why was the RAND health insurance experiment unique and why are its results still used today? Briefly explain.

6. Suppose Chuck pays a premium of $200 and his payout if he gets sick is $1,000. If you know that his insurance is partial and unfair, what are possible values for IH (income if healthy), IS (income if sick), p (probability of being in the sick state). Briefly explain.

IH = _______

IS = _______

p = _______  

7. What are the three main parts of the Affordable Care Act (Obamacare). Briefly explain each.

8. What are two similarities between the Beveridge type healthcare system and the American healthcare system? Briefly explain.

9. What are two ways in which the Medicare system attempts to control costs?

10. Overall, do areas in the US that spend more on healthcare have better health outcomes as well? If not, briefly explain why not.