Houston HCAD 4354 – Economics for Healthcare

UHV-SBAHCAD 4354 Economics for HealthcareHomework 4The homework covers the textbook Ch 11-14. You may discuss the questions withclassmates. However, it must be your individual work. Copying answer from otherswill violate ACADEMIC HONESTY policy to cause a failing grade. Please showthe derivation process and limit your answers within 5 pages. Highlight the answerfor each question in MS Word format. No cover sheet is required. If you don’t knowhow to edit math notations, just explain the process. Please submit you solution file as anattachment.Q1: (Chapter 11) (15%)Managed care plans tend to lower health care costs, yet the level and growth of managedcare premiums are similar to those of traditional fee-for-service insurance plans. How canthat be explained? Q2: (Chapter 11) (15%)Explain the difference between voluntary and involuntary uninsurance and betweenfrictional, structural, and cyclical uninsurance. Q3: (Chapter 12) (10%)Physician assistants have long argued that they have the ability to provide as much as 70percent of the medical services provided by primary care physicians at a much lower cost.Yet government regulations limit their ability to work independently of physicians. Explainwhat would happen to the level of competition in the physician services market if all thestatues limiting the activities of physician assistants were eliminated. Q4: (Chapter 12) (15%)A recent study by the U.S. Department of Health and Human Services (2006) projects asufficient supply of physicians to meet demand for the coming decade. As you know fromyour readings in this chapter, this result contradicts earlier research on the subject. Thestudy also points out the difficulty researchers face when forecasting the demand andsupply of physician services. If you were developing a model to forecast the demand forphysician services over the coming decade, what demographic and economic factorswould you include in your analysis and why? Q5: (Chapter 13) (10%)Executives of not-for-profit hospitals have been criticized for being overcompensated.Use the managerial expense preference model (Lecture of CH 13, Slide #13) to illustratethe theory behind these accusations. Q6: (Chapter 13) (10%)Some economists have suggested that the best way to control medical costs is to removethe profit incentive for health care providers, particularly hospitals. This would involvemaking all hospitals not-for-profit institutions. Use the utility maximization model toexplain the likely impact such a policy would have on the cost of producing hospitalservices. What would happen if instead a policy was instituted that reduced barriers toentry in the hospital sector and therefore made the market more competitive? Q7: (Chapter 13) (10%)1 According to empirical studies, what effect do managed care programs have on the costsof producing hospital services? How has managed care affected the quality of careaccording to studies? Q8: (Chapter 14) (15%)What three reasons are claimed to account for the high reported profits of pharmaceuticalcompanies? Do you think drug companies earn excessive profits? Why or why not? 2