SECTION II. SHORT ANSWERS (10 points each) Place your cursor after the arrows → and type the requested information or your answer. Expect that the text will move to accommodate the length of your answer.

1. Why is it easier to measure the effects of smoking on individual’s health than it is to measure the effects of anti-smoking campaigns on health? Be sure to discuss the idea of medical care as derived demand.

2. Discuss your opinion about the efficiency (or lack of thereof) of the Medicaid reimbursement mechanism for nursing home care. Do you expect the Medicaid reimbursement mechanism for nursing home care to change in the future, or to remain as is? Why?

3. Give some reasons for and against the idea that paying emergency room physicians a salary might provide an incentive for lower productivity than if they are paid by volume of services performed.


4. Explain why patients in hospitals are generally insensitive to price, but buyers of health insurance are sensitive to price differences in health insurance policies. Be sure to include an explanation of why insurance companies are very price competitive.

5. The number of large US employers offering wellness programs to their employees has been steadily increasing over the years. Weight management, nutrition, fitness, and/or other wellness initiatives are now being offered by more than half of such employers. Use the concept of determinants of health to discuss the reasoning behind this trend. What do the employers expect to gain from this additional expense? Compare short-run versus long-run gains, private versus societal gains.

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