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HCM 402 Economics for Healthcare Managers: Module 6 Chapter 13 || A Verified A+ Pass. CA$16.73
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HCM 402 Economics for Healthcare Managers: Module 6 Chapter 13 || A Verified A+ Pass.
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Asymmetric information correct answers is common in healthcare affects many relationships, has potentially serious consequences, must be considered by managers, and can be addressed in multiple ways. Asymmetric information is often a factor in correct answers provider-patient relations, ins...

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  • August 16, 2024
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  • asymmetric information

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HCM 402 Economics for Healthcare Managers: Module 6
Chapter 13 || A Verified A+ Pass.
Asymmetric information correct answers is common in healthcare
affects many relationships,
has potentially serious consequences,
must be considered by managers, and
can be addressed in multiple ways.

Asymmetric information is often a factor in correct answers provider-patient relations,
insurer-provider relations,
employer-employee relations, and
buyer-seller relations.

Adverse selection correct answers People with a hidden characteristic can take advantage of the
ignorance of others.
Example: Sick people buying life insurance

Moral hazard correct answers People can take hidden actions and take advantage of the
ignorance of others.
Example: Employees shirking

A Pooling Equilibrium correct answers Type Share Risk of Illness WTP Exp Cost
Well 95% 1% $750 $500
$500 = 1% * $50,000
ill 5% 10% $7500 $5,000
$5,000 = 10% * $ 50,000
*WTP= Willingness to Pay

If the insurer charges $725, everyone buys insurance. correct answers $725 = 95 percent × $500
+ 5 percent × $5,000
For the well, $725 < WTP = $750.
For the ill, $725 < WTP = $7,500.
Everyone is in the same risk pool.
The ill are getting a great deal.

Small changes make a
pooling equilibrium impossible. correct answers True

If the insurer charges $950,
only the ill buy insurance. correct answers $950 = 90 percent × $500 + 10 percent × $5,000
For the well, $950 > WTP = $750.
For the ill, $950 < WTP = $7,500.
The well drop out of the risk pool.

, Insurers can't tell the ill from the well. correct answers Eventually
insurance will cost $5,000, and
only the ill will buy it,
even though everyone wants insurance.

Employer-employee relations correct answers Is the employee really following protocols?
Is the employee opening the office on time?
**These are things employers and employees worry about every day. An employer can monitor
what an employee is doing, but that will cost money, annoy the employee, and give an imperfect
view of what's going on.

Buyer-seller relations correct answers Is the seller describing the product honestly?
Does this product really meet our needs?

Adding a time clock correct answers will cost money and will create data that need to be
analyzed, which costs even more.

Higher costs and lower morale are not recipes for success. correct answers Employee on a time
clock feeling put upon, but if the alternative is "ghost" employees on the payroll, monitoring may
be the better choice.

Asymmetric information can have serious consequences. correct answers Market failure
Inflated costs

Market failure correct answers Willing buyer may be unable to get insurance

Inflated costs correct answers Utilization review programs
Time clocks
Insurance underwriting programs

Asymmetric information often involves principals and agents. correct answers Principal: Person
for whom work is done.
Agent: Person who does work.

Examples of Principal correct answers Patient
Employer
Insurer
Owner of company

Examples of Agent correct answers Provider
Employee
Provider
Manager

The agent usually knows more about the work than the principal. correct answers Provider: What
are the therapeutic options?

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