{moral hazard} The following table gives the demand curve for doctor visits for Ralph, who doesn't have health insurance. Assume that Ralph responds only to the amount he must pay out of pocket when deciding how much care to use. By filling in the blank lines, calculate Ralph's new demand curve if he obtained insurance coverage that paid 80 percent of the bill. If the charges are $100 (i.e., Ralph pays $20 out of pocket), how many of the additional services Ralph uses are worth less (to him) than what they cost? How many are worth less to him than what he pays?

Price Number Out-of-Pocket Number of Visits per Visit of Visits Cost with Insurance with Insurance

Price per vist Number of Vists Out-of-pocket cost wo/insurance. Number of Visits w/insurance

$0. 20

$20. 18

$50. 15

$100. 10

$150. 5

Chapter 4

Getzen, Thomas, E. Health Economics and Financing. 5th edition