Jane has a budget of I dollars and is deciding how to invest over the three healthcare-related out-of- pocket spending categories: (1) preventive care, (2) dental care, and (3) chronic disease management. Denote the price of health investment in category 1, 2, and 3 as P1, P2, and P3 respectively; denote the quantity of health consumption in category 1, 2, and 3 as M1, M2, and M3, respectively. (a) Suppose the utility function of Jane is U(M₁, M₂, M³) = MM² Mr. Set up the Lagrange constrained optimization problem and write down the budget constraint. (b) Solve for Jane's optimal health investment quantity in category 1 (preventative care), 2 (dental care), and 3 (chronic disease management). (c) Provide an economic intuition of parameters a, ẞ, and y.

Jane has a budget of I dollars and is deciding how to invest over the three healthcare-related out-of- pocket spending categories: (1) preventive care, (2) dental care, and (3) chronic disease management. Denote the price of health investment in category 1, 2, and 3 as P1, P2, and P3 respectively; denote the quantity of health consumption in category 1, 2, and 3 as M1, M2, and M3, respectively. (a) Suppose the utility function of Jane is U(M₁, M₂, M³) = MM² Mr. Set up the Lagrange constrained optimization problem and write down the budget constraint. (b) Solve for Jane's optimal health investment quantity in category 1 (preventative care), 2 (dental care), and 3 (chronic disease management). (c) Provide an economic intuition of parameters a, ẞ, and y.

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter4: Economic Evaluation In Health Care

Section: Chapter Questions

Problem 8QAP

See similar textbooks

Similar questions

Jane has a budget of I dollars and is deciding how to invest over the three healthcare-related out-of- pocket spending categories: (1) preventive care, (2) dental care, and (3) chronic disease management. Denote the price of health investment in category 1, 2, and 3 as P1, P2, and P3 respectively; denote the quantity of health consumption in category 1, 2, and 3 as M1, M2, and M3, respectively. (a) Suppose the utility function of Jane is U(M,, M2, M3) = M{ M, M. Set up the Lagrange constrained optimization problem and write down the budget constraint. (b) Solve for Jane's optimal health investment quantity in category 1 (preventative care), 2 (dental care), and 3 (chronic disease management). (c) Provide an economic intuition of parameters a, B, and y.
Jane has a budget of I dollars and is deciding how to invest over the three healthcare-related out-of- pocket spending categories: (1) preventive care, (2) dental care, and (3) chronic disease management. Denote the price of health investment in category 1, 2, and 3 as P1, P2, and P3 respectively; denote the quantity of health consumption in category 1, 2, and 3 as M1, M2, and M3, respectively. (a) Suppose the utility function of Jane is U(M1, M2, M3) = Mỹ M, M. Set up the Lagrange constrained optimization problem and write down the budget constraint. (b) Solve for Jane's optimal health investment quantity in category 1 (preventative care), 2 (dental care), and 3 (chronic disease management). (c) Provide an economic intuition of parameters a, ß, and y. (d) Now suppose the government offers Mf unit of free annual teeth cleaning through public health insurance coverage, where Mf > 0. The quantity of dental care consumption for Jane is now = M2 + Mf. How much out-of-pocket spending…
Describe Grossman's Improvement Model of Health. How does Grossman reconcile health as both something in demand and something produced by individuals?
There are many ways to define and measure the benefits and costs that go into the GPI. How do you think a person with a biocentric worldview would measure these differently from a person with an anthropocentric worldview? Whose GPI for the year 2005 would likely be higher?
Suppose that your utility function over health care (h) and other goods (c) is given by U(h, c) and that you have a fixed income of $100. (Assume that the indifference curves of your utility function bear the usual convex shape.) Each year, you choose h and c to maximize your utility subject to a budget constraint: phh+pcc=Ywhere ph is the price of health care, pc is the price of other goods, and Y is your income. In year 1, the price of health care is $1, while the price of other goods is $2. At these prices, you demand 30 units of health care and 35 units of other goods. In year 2, your utility function and your income do not change, but prices do. Health care becomes more expensive at $1.50, while other goods become cheaper at $1.50. At these prices, you demand 20 units of health care. a. Assuming you spend all your income in year 2, how many units of other goods do you buy?b. Draw a graph with your demand for health care on the horizontal axis and your demand for other goods on the…
What is the difference, if any, between “Pharmacoeconomics” and “Health Economics”? Explain how microeconomics and macroeconomics are relevant to this field of study and support your answer with plausible examples. Based on your answer, illustrate why studying Pharmacoeconomics has become inevitable and remarkably essential in healthcare provision nowadays.
Economics Use the following information to determine the costs to you and/or to the insurance company for the following occurrences:1) You have $500 per person Wellness Benefit.2) You have a $500 İndividual Deductible and your family (spouse and children) has a $500 Family Deductible.3) You have a $10,000 annual Maximum Family Out-of- Pocket expense provision.4) Once you have met your Individual or Family Deductible, your insurance will pay 80% of the expenses and you will pay 20% as your co-pay.Unless the occurrence is a Wellness expense, you and/or your family have to meet their deductibles first before insurance will pay anything. Example:Assume that you have met your deductible, and you go to the Emergency Room for a large cut on your shin which required cleaning, 20 stitches, a tetanus shot, and antibiotics. (80/20 plan)Total Charges = $2,500 totalYour Responsibility = $2,500*.20 = $500 (goes toward your Max Out of Pocket)Insurance Responsibility = $2,500*.80 = $2,000 Question:…
“The consumption function and budget constraints explained are useful elements inunderstanding the microeconomic approach to health spending.” With the use ofappropriate graphs and mathematical expressions, critically evaluate this statement.
One of the most robust, fundamental “facts” of health economics is the SES and health gradient. a) Define the SES and health gradient. b) Give three ways in which the SES and health gradient is robust. c) Provide evidence that some of the gradient is correlational (i.e., give a potential confounder) and evidence that the gradient is in fact causal. d) i. Give an interpretation of Figure 1 below in layperson terms. ii. What pattern do you see for men vs women? iii. “The education and mortality gradient does not depend on healthcare spending or whether the country has universal healthcare.” Use Figure 1 to support or refute this claim.
Show how a consumer would choose between medical care and health(y) behavior activities using the graphical representation of the consumer choice model (assume that “amounts” of healthy behavior have “costs” or prices).
Q4. If the cost expended in an intervention is 160m, cost saved due to averted diseases is 35m, cost saved due to productivity lost averted is 23m, outcome of health intervention is 65 and outcome of health without intervention is 24. Determine; Cost effectiveness ratio ii. Cost saved iii. Net health outcome iv. Net cost
Suppose consumers consume and gain utility from two types of goods and services – (1) health care and (2) all other goods & services. Using this information, derive the demand curve for health care.