When you finish this chapter, you should: Define the key terms of economics and opportunity cost and understand how a production possibilities frontier exemplifies the trade-offs that exist in life, distinguish between increasing and constant opportunity cost and understand why each might happen in the real world, analyze an argument by thinking economically, while recognizing and avoiding logical traps. | Lecture Issues in economics today - Chapter 20 Chapter 20 Health Care McGraw Hill Irwin 2002 The McGraw Hill Companies Inc. All Rights Reserved. Chapter Outline WHERE THE MONEY GOES AND WHERE IT COMES FROM INSURANCE IN THE . ECONOMIC MODELS OF HEALTH CARE COMPARING THE . WITH THE REST OF THE WORLD McGraw Hill Irwin 2002 The McGraw Hill Companies Inc. All Rights Reserved. The Money 14 of GDP spent on health care trillion of 10 trillion 43 spent by governments Medicare Medicaid etc. McGraw Hill Irwin 2002 The McGraw Hill Companies Inc. All Rights Reserved. Government Health Programs Medicare public insurance in the . which covers those over age 65 214 billion Medicaid public insurance in the . which covers the poor 186 billion McGraw Hill Irwin 2002 The McGraw Hill Companies Inc. All Rights Reserved. Where the Private Money Comes From Private Insurance 355 billion Out-of-Pocket Patient Expenses 187 billion McGraw Hill Irwin 2002 The McGraw Hill Companies Inc. All Rights Reserved. Where the Money Goes Hospitals 391 billion Doctors 269 billion Prescription Drugs 100 billion Research 22 billion McGraw Hill Irwin 2002 The McGraw Hill Companies Inc. All Rights Reserved. Insurance Coverage 84 covered all year 11 covered part of the year 5 without any insurance all year McGraw Hill Irwin 2002 The McGraw Hill Companies Inc. All Rights Reserved. Insurance Types Private Group Insurance 168 million Private Individual Insurance 22 million Medicare 36 million Medicaid 28 million McGraw Hill Irwin 2002 The McGraw Hill Companies Inc. All Rights Reserved. Why People Buy Insurance People who believe that their insurance premiums will be less than their expected health care expenditures will buy insurance. People who are risk averse they would rather pay more than their predicted expenditures to limit their risk of large expenses will buy insurance. A person who is risk neutral they would not pay more than their predicted expenditure to eliminate uncertainty would .
