Figure 10.5 Does public insurance crowd out private insurance? In Panel A, the introduction of public insurance has no impact on private insurance coverage. In Panel B, the introduction of public insurance crowds out private insurance. Panel C shows the preferences of someone who carried no private insurance, but obtains public insurance after it is introduced. ********** A. Person who places relatively high C. Person who is uninsured before public insurance value on private insurance 0 Amount of publicly provided insurance Health insurance O B. Person who places relatively low value on private insurance Amount of publicly provided insurance Health insurance 0 Amount of publicly provided insurance ************ Health insurance

Figure 10.5 Does public insurance crowd out private insurance? In Panel A, the introduction of public insurance has no impact on private insurance coverage. In Panel B, the introduction of public insurance crowds out private insurance. Panel C shows the preferences of someone who carried no private insurance, but obtains public insurance after it is introduced. A. Person who places relatively high C. Person who is uninsured before public insurance value on private insurance 0 Amount of publicly provided insurance Health insurance O B. Person who places relatively low value on private insurance Amount of publicly provided insurance Health insurance 0 Amount of publicly provided insurance ** Health insurance

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.4P

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Similar questions

How can deductibles, copayments, and coinsurance reduce moral hazard?
In an insurance system, would you expect each person to receive in benefits pretty much what they pay in premiums or is it just that the average benefits paid will equal the average premiums paid?
What is the problem of moral hazard?
How might adverse selection make it difficult for an insurance market to operate?
For each of the following kinds of insurance, give anexample of behavior that reflects moral hazard andanother example of behavior that reflects adverseselection.a. health insuranceb. car insurancec. life insurance
A9 Describe an example of adverse selection that we may run into in the real world. How does adverse selection impact the policy holders for this specific type of insurance for: High risk participants? Low risk participants? What is one government regulation that has been enacted in the last 20 years that helps either high risk or low risk policy holders in the United States
12. True or False? Medicaid is a U.S. federal- and state- government-sponsored insurance program that provides insurance to people under age 65 whose incomes fall below a certain threshold (level). O True O False
Which of he following stalements about lhe Time Limil on Certain Defenses provision in an Accident and Heallh policy is CORRECT? A.It specifies the period of time after which an insurance company can deny a claim on he basis of the claim having pre-existed before the effective dale of coverage. B.It specifies the period of lime during which the insured must submit Proof of Loss. C.It prohibits legal actions against the insurance company after a specified period of time. D.It prevents an insurance company from maki any changes to a policy after il is issued.
(80) purchases a whole life insurance policy of 100,000 payable at the end of the year of death. You are given: I. The policy is priced with a select period of one year. II The select mortality rate equals 80% of the mortality rate from the Standard Ultimate Life Table. III Ultimate mortality follows the Standard Ultimate Life Table. i=0.05 Calculate the actuarial present value of the death benefits for this insurance. A.58,950 B.59,050 C.59,150 D.59,250 E.59,350
What do you understand by the term "Health Insurance"?2. Describe the different types of Health Insurance3. Discuss factors that would make any two mentioned types of health insurance successful.
Nathan's income in a typical year is 75,000. There is a 10 percent chance that Nathan will be seriously ill next year, incurring 15,000 in medical expenses. Samantha also earns 75,000 in a typical year. Her chance of becoming seriously ill next year and incurring ur 15,000 in medical expenses is 20 percent. a. Calculate the actuarially fair premium for full insurance for (i) Nathan and (ii) Samantha. b. Suppose that a private insurance firm cannot distinguish between Nathan and Samantha in terms of their risk and assumes the risk of being seriously ill in the general population is 10%. In this context, discuss the adverse selection problem the firm might face. c. Can a compulsory, government - run health insurance program avoid the problem of adverse selection? Explain why or why not.
3. Moral Hasard and Insurance The utility is U = W¹/2-350S+95S¹/2; where W is wealth and S is care taken to avoid accidents. Probability of accident is 0.70-S¹/2 Wealth is $850,000 without accident and $300,000 with accident. a. Calculate S, EU and CE without insurance. b. Calculate S and EU with full insurance.