Homework One_2010_sol

Homework One_2010_sol - Health Economics (Econ 129)...

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Health Economics (Econ 129) Homework #1 – Solutions (15 pts) Due Thursday Jan 13 th 1. Explain the change in the percentage of the U.S. population with health insurance from 1940 to 2000. (1 pt) In 1940 only 10% of the population had health insurance. The private health insurance industry grew rapidly in the 40s and 50 so that by 1960 70% of the population had hospitalization insurance. Medicare and Medicaid came into existence in the early 1960, which further increased the percent of population with insurance. However, beginning around 1980, further persistent declines in the uninsurance rate did not materialize. 2. In response to the risk associated with swine flu the government made vaccines available to the general populations. Some groups of people are at higher risk of contracting swine flu then others due to their age and/or number of people they interact with. Additionally all vaccines carry with them some risks and the risks vary across groups of people. (4 pts) Imagine the consequences of vaccinating different groups of people are as follows: (assume each group contains 1,000,000 people) [I made these numbers up but the relative magnitudes are about right] Vaccinate 1,000,000 health care workers save 15 lives –group a Vaccinate 1,000,000 school-aged kids save 8 lives –group b Vaccinate 1,000,000 people age 30-50 save 1 life –group c Vaccinate 1,000,000 people age 50-65 save 3 lives kill 1 person –group d Vaccinate 1,000,000 elderly people save 6 kill 3 people (the elderly are frail)–group e Vaccinate 1,000,000 pregnant women save 7 lives kill one women –group f Vaccinate 1,000,000 people with weak immune systems save 3 and kill 4 –group g a) Draw and clearly label the associated Health Care Production Function. Does it exhibit diminishing marginal returns? See attached. First you would vaccinate group a, then group b, then group f, then group, e, then group d, then group c, and finally group g. Yes, it exhibits diminishing marginal returns since each successive group to get vaccinated get less and less benefits. b) If the government can only produce 4,000,000 vaccines which groups of people should
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Homework One_2010_sol - Health Economics (Econ 129)...

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