RMI 3501 Lecture Notes - Lecture 5: Unnecessary Health Care, Marginal Utility, Marginal Cost
12 Dec 2016
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Topic 5 environment of health care plans. Er based distribution system for health insurance. Ie: hospital, doctor, labs, medicine: high degree of third party payment. Increases consumption further to reach a new equilibrium. What is the lethal combination: marginal benefit of the last unit consumed as seen by the user = Marginal cost of the last unit consumed as seen by the user: true mc > true mb for the last unit consumed due to. Overutilization: individuals who have 3rd party payment ( insurance") tend to use/purchase more hcgs than those individuals who do not have. 3rd party payment and they are not necessarily sicker people: equals moral hazard issue! Incentive for providers to maximize the number of billable services: *assuming that what you"re paying them is worth their effort! don"t treat everyone equally money talks, medicaid = not enough doctors because they aren"t compensated enough. Salary: no incentive to maximize # of services.
