If the government pays 100% instead of 80% of each patient’s medical bill there would be a new demand curve D.

a. Draw D  on your diagram.

b. Suppose taxpayers and the government want E to be only $10,000 so government imposes a price control of P *  $100. Then the suppliers (doctors, medical technology firms, drug firms) are only willing to supply Q  ________.

But with P  $100, D is ( greater, less ) than Q; show this in the diagram. Many patients would be unhappy because there would be a w________ l________.

How many patients would be unhappy? ________.

c. With P *  $100, if the government makes patients pay 20% (so insurance pays 80% instead of 100%) then the w________ l________ would be ( shorter than, the same as ) with 100% insurance because patient demand would be ( less, the same ). Also, switching from 100% insurance to 80% insurance would ( increase, decrease ) taxes.