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Health Economics solutions to comprehension questions only
Typology: Exercises
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Indicate whether the statement is true or false, and justify your answer. Be sure to cite evidence from the chapter and state any additional assumptions you may need.
FALSE. Just as with any good, deriving a demand curve for health care is dif- ficult because it requires information about how the same population would react to different prices. This requires either parallel universes or, more real- istically, a randomized experiment.
TRUE. Randomization ensured that the groups facing different prices were statistically equivalent. That meant that any difference in demand between groups was attributable to price, not some other characteristic.
FALSE. Although the Oregon Medicaid Experiment was not exactly a con-
2 | Health Economics Answer Key
trolled experiment, it did use randomization to assign participants to differ- ent groups, and one group (the “lottery winners”) were much more likely to obtain health insurance.
FALSE. The people assigned to the free plan visited the hospital more fre- quently and were more likely to visit the ER.
FALSE. That result would imply that people are more price sensitive when it comes to more urgent health care. Instead, the arc elasticity of demand for impatient care was smaller in absolute value.
FALSE. Any measure of elasticity requires data from at least two price levels in order to measure responsiveness to price.
FALSE. The RAND HIE finds that demand for health care is very inelastic, with arc elasticities around 0.2.
TRUE. The RAND HIE finds that generous insurance only provided small health improvements to healthy people. However, high-risk participants (like those who were smokers or had high blood pressure) did receive sub- stantial health benefits from more generous insurance.
FALSE. The Oregon Medicaid Experiment studied the impact of uninsur- ance.