Economics of Healthcare

Question One

Define and provide an original example of the concepts listed below.
Discuss their significance in determining the efficient functioning of a medical market.

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Concepts
Moral Hazard
Adverse Selection
Asymmetric Information
Third-Party Payer
Cream Skimming

Question Two

Describe the theory of physician induced demand for medical services.
Explain how the dual nature of the physician’s role as both advisor and provider support the induced demand theory.
Identify and explain what implications physician induced demand have for healthcare policy.
Discuss how health insurance reinforces physician induced demand.
Discuss what the natural limits to the alleged problem of physician induced demand are.

Question Three

Describe the different characteristics of the for-profit and the not-for-profit hospitals.
Discuss whether the non-for-profit hospital status eliminates the for-profit behavior. Explain your answer.
Define cost-plus pricing and discuss how it affects hospital’s behavior.

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