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1.Briefly discuss (some of) the important efficiency and welfare ramifications of each of the following alterations to Social Security. (a) Increasing the age of retirement to 70 years old. (b) Eliminating early retirement at age 62. (c) The shifting of FICA taxes into a personal and private retirement account. (d) Using government debt to fund excess social security obligations

2.Consider an insurance policy with a 50% coinsurance rate and an annual deductible of 500 dollars. The insurer is considering changing the deductible to 1000 dollars. What types of behavioral changes is this likely to incentivize or disincentivize? If the goal of the policy change is to reduce expenditures, do you think it will have a significant impact? (why or why not?)

3.. Consider two possible health insurance policies. Policy 1 is a coinsurance policy that covers 2/3 of any health care expense but has no upper limit to individual spending (i.e. an infinite deductible). Policy 2 is a catastrophic insurance policy that only covers very expensive injuries or illnesses but covers 100% of those costs. (a) Which of these policies is likely to be more effective at providing consumption smoothing for insurees? (b) Based on the findings in the RAND health insurance experiment, which policy is most likely going to reduce expenditures on health care? (c) Would you expect one policy to provide a higher quality of health than the other? (Why or why not?)

4. Explain why supply induced demand is so prevalent within the health care industry compared to other industries. What is the connection between this and moral hazard?

5.. Suppose you are tasked with proposing a policy change to reduce the problems associated employer provided health insurance. Propose a policy (or a policy change) that would achieve this goal and provide some arguments for why the government ought to fulfill your proposal.


What do alcoholic beverages do in Health?
What do alcoholic beverages do in Health.Discuss.

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