Question
Consider an economy in which health care is privately provided. People can either pay out of pocket for health care as they need it, or
Consider an economy in which health care is privately provided. People can either pay out of pocket for health care as they need it, or purchase health insurance from one of some number of unregulated private health insurance companies. Your boss is a politician who is upset that both health insurance prices and treatment costs (both for treatment that the consumer buys directly and for treatment paid for by insurance) are so high. With reference to the relevant fundamental economics, your job is to explain what's going on to your boss. a) What group(s) in this economy do you think are least likely to have health insurance and why? How might your answer relate to the price of health insurance? b) How might market power and moral hazard be contributing to treatment costs being so high, (i) for consumers directly and (ii) for treatment paid for by insurance? Explain
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