ECON 425 Pennsylvania State University Healthcare System US Government Questions Homework for Econ of Pub Exp, which due Sunday 11:59 pm East time. And ins

ECON 425 Pennsylvania State University Healthcare System US Government Questions Homework for Econ of Pub Exp, which due Sunday 11:59 pm East time. And inside have 6 questions, required finished by word doc. Economics 425
Homework 5
Lessons 9 and 10
1) (15 points) Suppose the U.S. government’s tax policies on employer health coverage were to be changed.
In particular, suppose health premiums paid through the employer were no longer tax exempt. In its place,
the government provides a 25% subsidy for all employer health expenditures. That is, the government
gives a tax credit to the employer worth 25% of expenditures. How might this new policy impact who gets
insurance? Will there still be a tendency for plans that have relatively high premiums and low OOP costs?
In a paragraph or two, concisely answer these questions and clearly explain your reasoning.
2) (10 points) Individuals without health insurance impose substantial negative externalities on those who do.
In a paragraph, list some of these externalities and briefly describe their signficance.
3) (30 points) Comparative Health Care Systems.
a.
In a paragraph (or two), summarize the major features of the health care systems for one of the following
nations: Britain, Germany, Switzerland, Taiwan, or Japan.
b.
In a second paragraph (or two), speculate on which specific elements of the health care system for the
country you’ve chosen would be good for the U.S. to emulate, and which would not. There is no right or
wrong answer for this part, scoring is based on thoughtfulness, clarity of your answer, and using economic
ideas correctly.
4) (20 points) Let’s divide medical care into two groups: Routine and Catastrophic. We’ll define Routine care
as being essentially predictable and relatively cheap. Catastrophic care strikes individuals more or less
randomly and is rare. Some have catasrophes, most don’t, but when it does strike it is devastating and
extremely costly. In the end, suppose 25% of health expenditures are for Routine care and the remainder is
for Catastrophic care. In a paragraph (or two), compare the following two insurance policies: a) 25%
coinsurance for all medical care (the individual is responsible for 25% of the bill); b) 100% coinsurance for
Routine care, 0% coinsurance for Catastrophic care. In particular, comment on consumption smoothing,
and the effect on overall expenditures from both policies.
5) (15 points) In a paragraph (or two), describe the “three-legged-stool” of the Affordable Care Act. How do
the legs work together? Why is the stool likely to fall if one of the legs is removed?
6) (10 points) What is meant by “retrospective” billing of health care expenses. How can a system of
retrospective billing impact health care expenditures?

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