Below is an example of supply and demand for healthcare services in the U.S.

1) If patient copays average to 20%, and their Insurance pays the other 80% of the cost of their visit, what quantity will be exchanged in this market? Remember, the assumption here is that the consumers' willingness to pay is based on their out-of-pocket cost, rather than the total cost of a visit.

2) What is the total amount spent on Healthcare when patients only pay 20% of the total cost.

3) Healthcare costs continue to rise faster than GDP, taking up an increasing share of total U.S. expenditures. What is one way that we might reduce total healthcare expenditures? Use the values on the table (estimates are totally fine) to illustrate how your proposal would reduce the total cost of healthcare.

Demand for Supply of Average cost office visits office visits per visit (Millions/yr) (Millions/yr) $323 988 118 $647 928 208 $970 868 298 $1,293 808 388 $1,616 748 478 $1,940 688 568 $2,263 628 658 $2,586 568 748 $2,909 508 838 $3,233 448 928 Healthcare Market $3,500 $3,000 $2,500 8 @ $1,500 Demand for office visits Supply of office visits Average $1,000 $500 SO 0 200 400 600 800 1000 1200 Millions of Office Visits Per Year