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HE+ANS+to+HW4+-+Spring+2010 - Department of Economics...

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Department of Economics Prof. Derek DeLia Health Economics 220:316:01 Spring 2010 ANSWERS TO HOMEWORK #4 QUESTION 1 : a. People were randomly assigned into different health plans that varied according to the amount of cost-sharing required of patients. Some plans also varied by having dental or mental health coverage and some individuals were enrolled in a managed care plan. b. Adverse selection was not a problem at all because patients were assigned to plans randomly. This is a major strength of the experiment. c. The greatest price elasticities were found for outpatient visits, especially well-care visits and dental visits. Price was more important in determining the use of these services because they tend to be more discretionary for patients relative to other kinds of services like emergency care and hospital admissions. d. People with more generous insurance used a great deal more health service. However, the extra service was not systematically associated with improvement in health according to the health measures examined.
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