1. Different reimbursement and consumer copayment schemes influence the utilization of health care. In a health care system:

a. If the payment to health care providers is fixed (such as a global budget regardless of the number of patients served), what is the likelihood that there will be over-utilization of health care under this system? Does it matter whether the out-of-pocket costs to consumers are high or low?

b. If the payment to health care providers is variable (e.g. based on volume), what is the likelihood that there will be over-utilization of health care under this system? Does it matter whether the out-of-pocket costs to consumers are high or low? If so, explain why?