With the existence of health insurance, the out-of-pocket price most HC patients face is only a frac… Show more With the existence of health insurance, the out-of-pocket price most HC patients face is only a fraction of the full price for the HC services they consume. Consider a patient whose health benefits (measured by her willingness-to-pay) from different quantities of HC services are as follows: Health Care Quantity Health Benefit ($) 1 $1400 2 $2200 3 $2500 4 $2700 5 $2750 6 $2775 7 $2780 a. If providers charge $100 per quantity unit, what quantity would the patient purchase if she is fully informed about the health benefits produced by different levels of treatment and had no insurance? b.What if the patient is covered by a health insurance policy that pays 90% of all HC expenses (i.e. a 10% coinsurance rate)? Assuming the price of health care ($100/unit) reflects its true marginal cost, quantify the “efficiency loss” (decrease in economic surplus) resulting from the patient’s treatment choice when insured. c. Suppose the patient relies on her physician to determine the appropriate level of care she should receive. Assume also that physicians’ incomes increase when they provide more services. If the physician is a “good agent” for her patient (recommends the treatment an informed patient would want), what quantity of services will she recommend? If the physician is interested in maximizing her income, how many services will she recommend? d.True or false: A physician operating as a good agent for their patient will only provide services when it is efficient to do so. • Show less