The Structure of Incentives Built into Standard Comprehensive Health Insurance

question 17

Essay

The structure of incentives built into standard comprehensive health insurance gives no one an incentive to control health care costs.If the patient and the doctor lack any incentive to consider costs,will the output of medical services be higher or lower than if they did consider costs? Illustrate your answer with a diagram.Clearly label the welfare cost resulting from the over-consumption of medical services.

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Definitions:

Latissimus Dorsi

A large, flat muscle on the back that stretches to the sides, behind the arm, and is partly covered by the trapezius on the back near the midline.

Adducts

Molecules formed by the addition of two or more substances, commonly used in the context of DNA where chemicals may attach to DNA, forming adducts.

Rotates

The act of turning around an axis or center point.

Body Weight

The weight of a person's body, often used in the context of health and fitness to discuss body composition and weight management.