Jim currently pays premium p for his health insurance which


Jim currently pays premium $P for his health insurance, which he purchases in a competitive health insurance market, and covers 80% of all his healthcare costs (i.e. 20% coinsurance rate; no deductible or catastrophic cap). If he were to instead purchase insurance that covers 90% of his healthcare costs, the premium would be expected to increase for three reasons. What are those three reasons, and explain how each operates to affect the relative price of more complete coverage.

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Business Economics: Jim currently pays premium p for his health insurance which
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