Economics 236 - Health Economics & Policy Problem Set 3-
1) True or False? Explain your answer.
a) Because of the role of employers in the United States health care markets the problem of adverse selection almost does not exist.
b) Large employers find it financially easier (than small employers) to offer the health insurance benefit to their employees. Under no circumstances do small employers benefit for the existence of large employers the way the system currently works.
2) Health Maintenance Organizations (HMOs) have lower hospitalization rates per person than do Fee for Service (FFS) insurance plans. Would you say that this is mostly due to: (a) the use of preventive medical care by HMOs, (b) financial incentives to patients, (c) financial incentives to doctors, or (d) because the HMOs manage to enroll mostly healthy people anyway. (I want you to indicate and discuss only the most likely reason.)
3) Managed Care organizations are clearly the superior form of health insurance. They save money, offer good care, and generate no complains. Do you agree or disagree with this statement? Present the pros and cons of Managed Care in answering this question.