There is a concern that government funding to extend health insurance to the currently uninsured would increase cost per visit. Re-draw Figure 9.3. Explain this problem. Why is an economy of scale unlikely to create savings with expanded health care? Canada has government funded-coverage for all citizens. Canada also manages to have lower total health care expenditures per citizen than in the United States. What differences, with proposed U.S. health care expansions, have allowed Canada to spend less.

Figure 9.3

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Price (Dollars per Unit of Service) NO 2 A B Q* Q₁ Health Care Services per Year Supply Marginal Social Cost Loss in Net Benefits Demand = Marginal Social Benefit