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Free Unregulated Market In Healthcare Case Study

459 Words2 Pages

#1. What is a market failure? What are the major reasons that a free, unregulated market in medical care might not be optimal?
Market failure is when a market does not adequately yield an acceptable level of output. A free unregulated market in medical care might not be ideal because in a free unregulated market we might see individuals jacking up the prices of healthcare because they are not being supervised by anyone. Also, if it is not regulated we cannot really ensure the medical professionals have the patients best interest at heart.
#4. How do price controls affect the workings of a perfectly competitive market? Use a supply-demand diagram as part of your answer.
Price controls affect a perfectly competitive market because there is a max amount goods that can be sold while a competitive market means that the revenues acquired are based off supply and demand and companies only earn enough to keep their head above water. …show more content…

In some situations, the patient may have more information than either the physician or the provider. Explain a possible situation where the patient may try to use this information to gain an advantage, and then state what the provider or a physician may do to limit the information asymmetry.
Often insurance companies offer incentives for member who are enrolling and live healthier lifestyles such as not drinking or smoking. However, to get better rates for insurance purposes a member might lie about certain at-risk behaviors such as being an alcoholic, smoking or a preexisting health condition. Lying might lead to more health issues overall causing insurance companies to shell out more money however, this would help the member overall save

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