Question

In: Economics

QUESTION 20 Suppose that managed care costs $3,000 per enrollee and FFS costs $4;000 per enrollee...

QUESTION 20 Suppose that managed care costs $3,000 per enrollee and FFS costs $4;000 per enrollee and each enrolls one-half of the population. Suppose each sees their costs increase by 5 percent over the course of a year. At the end of the year, average patient costs across both groups will have:

A) increased from $3,500 to

B) increased from $4,000 to$4,200

C) stayed constant

Expert Solution

Managed care cost per enrollee = $3,000

FFS cost per enrollee = $4,000

Both programs enroll one-half of the population.

Calculate the average patient cost across both groups -

Average patient cost = [$3,000 + $4,000]/2 = $7,000/2 = $3,500

The average patient cost across both groups is $3,500.

Now, both costs increases by 5%.

Managed cost per enrollee after increase = Initial managed care cost per enrollee + Increase = $3,000 + [$3,000 * 0.05] = $3,000 + $150 = $3,150

FFS cost per enrollee after increase = Initial FFS cost per enrollee + Increase = $4,000 + [$4,000 * 0.05] = $4,000 + $200 = $4,200

Calculate the average patient cost across both groups after increase -

Average patient cost across both groups after increase = [Managed cost per enrollee after increase + FFS cost per enrollee after increase]/2 = [$3,150 + $4,200]/2 = $3,675

The average patient cost across both groups after increase is $3,675.

Thus,

The correct answer is the option (A) [Increased from $3,500 to $3,675].

Rahul Sunny answered 1 year ago

1. Compare and contrast FFS insurance plans to managed care insurance plans (HMOs) with respect to:...

1. Compare and contrast FFS insurance plans to managed care insurance plans (HMOs) with respect to: (a) How providers are paid (b) Patient choice of providers (c) Patient access to medical services Be as specific as possible.

(a) Name three key elements that distinguish managed care from traditional FFS insurance. What was the...

(a) Name three key elements that distinguish managed care from traditional FFS insurance. What was the primary change from traditional FFS insurance? (b) Describe how incentives may di§er between traditional FFS insurance and HMOs from a dynamic perspective

Discuss how switching Medicaid and Medicare beneficiaries from the fee-for-service (FFS) system to managed care plans...

Discuss how switching Medicaid and Medicare beneficiaries from the fee-for-service (FFS) system to managed care plans affects healthcare utilization, costs, and outcomes.

Managed care plans tend to lower health care costs, yet the level and growth of managed...

Managed care plans tend to lower health care costs, yet the level and growth of managed care premiums are similar to those of traditional fee-for-service insurance plans. How can that be explained?

Describe the approach used by managed care to reduce health care costs. Has it been affective...

Describe the approach used by managed care to reduce health care costs. Has it been affective at reducing costs? Has it reduced the percentage of GDP spent on medicine?

A consumer has an income of $3,000. Wine costs $3 per glass, and cheese costs ...

A consumer has an income of $3,000. Wine costs $3 per glass, and cheese costs $6 per pound. a. (0.5 pt) Draw the consumer’s budget constraint with wine on the vertical axis. (Make sure to label the axes.) b. (0.1 pt) What is the slope of the budget constraint? c. (0.1 pt) On the graph for part a, draw an indifference curve illustrating an optimum bundle (point K). d. (0.4...

What is the evidence concerning the effect of managed care? Is managed care cheaper for employers...

What is the evidence concerning the effect of managed care? Is managed care cheaper for employers that traditional indemnity approaches? Does managed care give enrollees a better deal (i.e., the same or better health care at lower cost)? Discuss factors that make answering some of these questions difficult to get right.

Fixed costs are $3,000, variable costs are $5 per unit. The company will manufacture 100 units...

Fixed costs are $3,000, variable costs are $5 per unit. The company will manufacture 100 units and chart a 50% markup. Using the cost-plus pricing method, what will the selling price be?

MANAGED CARE AND HEALTH INSURANCE PROJECT Pros and Cons of Managed Care in America Students will...

MANAGED CARE AND HEALTH INSURANCE PROJECT Pros and Cons of Managed Care in America Students will submit their Managed Care Project in APA format Introduction: Students will submit a one paragraph introduction of the topic they will be discussing. Body of the Paper will include the following. Explain your topic in detail. Define the Challenges and Problems with your topic. What are recommended solutions to the challenges and problems? Are there any implementation to solve the challenges and problems? What...

Please 300 word no copy and paste QFD in a Managed Care Organization38 Managed care was...

Please 300 word no copy and paste QFD in a Managed Care Organization38 Managed care was introduced in the United States nearly two decades ago as a means to maintain qual- ity while managing costs. A managed care organiza- tion (MCO) contracts with physicians, hospitals, medical equipment companies, and home health agencies to provide services to its members (patients). The MCO markets its services and actively enrolls people. Once enrolled, members receive a handbook that explains how they can access...