Question

In: Economics

Type II Diabetes is a costly and potentially debilitating disease. The total costs incurred over a...

Type II Diabetes is a costly and potentially debilitating disease. The total costs incurred over a lifetime by a person with Type 2 diabetes were recently estimated to be $85,000 – from treating the disease directly, and complications like nerve damage, amputations, and stroke. Consider a simplified model of the market for health insurance, where diabetes is the only future health risk people face. Assume that there are 1,000 people classified as “normal weight” and 1,000 people classified as “overweight.” Normal weight people face a 20% chance of developing Type II diabetes in their lifetime, and overweight people a 30% chance. Assume an individual can expect to earn $2,000,000 over the course of their lifetime. Additionally, assume individuals spend all their money on consumption, and u(c)=c. Ignore any intertemporal considerations of interest rates, inflation or discount factors, i.e. r=0. Suppose insurance companies may measure the weight of an individual prior to offering them an insurance contract, and price their contract based on the result. Assume the only costs the insurance company faces are payments for medical costs if a person develops diabetes, that insurance companies are risk-neutral, and that the market for providing insurance is perfectly competitive. What prices for insurance contracts will be offered? p(normal weight)= ?? p(overweight)= ?? What will be the consumer and producer surplus in this market? CS= ?? PS= ??

(I have already calculated myself how much people are willing to pay for insurance so please answer the questions I have stated here)

Solutions

Expert Solution



Related Solutions

· Diabetes Mellitus Type II · Explain the pathophysiology of the disease · Discuss common clinical...
· Diabetes Mellitus Type II · Explain the pathophysiology of the disease · Discuss common clinical manifestations · List differential diagnoses · Determine which lab tests would confirm the diagnosis and expected results · Analyze a current protocol for treatment and discuss how the treatment works from the pathophysiological perspective
Create a response to the following post: Type II diabetes is the most common type of...
Create a response to the following post: Type II diabetes is the most common type of diabetes and it causes tissues to develop insulin resistance or simple the body cannot produce enough insulin. A common side effect of type II diabetes is obesity, however with the proper diet and exercise, weight loss is possible. A recommended diet for those with type II diabetes is to eat complex carbohydrates versus simple carbohydrates. What this means is that brown rice, whole wheat,...
Which of the following is a type of cardiovascular disease? -diabetes -hypertension -coronary artery disease -all...
Which of the following is a type of cardiovascular disease? -diabetes -hypertension -coronary artery disease -all of the above Which of the following daily dietary choices would be most effective in lowering blood pressure? -Reducing table salt use, drinking more water, and eliminating trans fat -Adding peanut butter to at least one meal, trimming visible fat from all meat, and adding fruit as a dessert -Eating salad for lunch, choosing decaffeinated instead of caffeinated coffee, and avoiding sweets -Consuming 3...
What are the differences between type I and type II diabetes? When the body does not...
What are the differences between type I and type II diabetes? When the body does not have enough insulin to convert carbohydrates into energy, what happens to the vascular system? Why are people with diabetes so much more vulnerable to heart disease and some cancers?
Using the graphic organizer below, compare and contrast Type I, Type II, and Type III diabetes....
Using the graphic organizer below, compare and contrast Type I, Type II, and Type III diabetes. Place at least 3 things that they all have in common in the center and at least 3 differences between them in the outer sections. Diabetes Type Similarities to other types Type1 1) 2) 3) Type2 1) 2) 3) Type3 (gestational) 1) 2) 3) Differences from other types Type1 1) 2) 3) Type2 1) 2) 3) Type3 (gestational) 1) 2) 3)
Hermione is using a combination of glyburide and pioglitazone for the treatment of type II diabetes....
Hermione is using a combination of glyburide and pioglitazone for the treatment of type II diabetes. Her condition is stable as she remains relatively compliant with her treatment. At her bachelorette party, she drinks a more than what she is used to, and faints soon after thereafter. Before fainting she experienced an elevated heart rate and confusion. She is rushed to the hospital, where they administer IV glucose and dextrose. Regarding the presentation, i) explain the underlying reasons leading to...
1. Type 2 diabetes is an example of a disease that results from the loss of...
1. Type 2 diabetes is an example of a disease that results from the loss of a normal signal transduction pathway. In a person who does not have type 2 diabetes, the pathway begins when insulin binds to the insulin receptors on the surface of a cell. This initiates a signal that tells the cell to synthesize glucose receptors and transport them to the cell membrane where they are to become incorporated. Once incorporated, they allow the cell to take...
1) Describe, with 2-3 sentences for each, Type I and Type II Diabetes. How are they...
1) Describe, with 2-3 sentences for each, Type I and Type II Diabetes. How are they different from each other? 2) List at least 3-4 risk factors/causes for CVD 3) What are the top three types of cancer in men? Which are the top three types of cancer for women? 4) Which geographical regions of the world is tobacco use most prevalent? 5) List some of the health issues associated with alcohol abuse? List some of the social issues associated...
6. In class, we learned about both Type I and Type II diabetes. Both of these...
6. In class, we learned about both Type I and Type II diabetes. Both of these diseases are due to inappropriate and dysregulated immune responses. Although both of these diseases are due to failures in insulin signaling, the immune mechanisms in the two types of diabetes are quite different. Explain how the immune system contributes to disease in Type I vs. Type II diabetes, being clear about the differences in immunological pathways and elements in these two conditions.
Capstone Case H: Cost-Effectiveness Analysis of Type II Diabetes Diabetes is a major health problem, particularly...
Capstone Case H: Cost-Effectiveness Analysis of Type II Diabetes Diabetes is a major health problem, particularly for the millions of Americans with undiagnosed diabetes, for whom treatment and glycemic control could substantially reduce the onset of complications of this disease. The CDC Diabetes Cost-Effectiveness Group has published a number of articles based on cost-effectiveness analyses (CEA) using a sophisticated Markov simulation model. This probability- based model predicts the onset of diabetes in a hypothetical cohort of patients and follows them...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT