Discuss what is meant by the statement, "income elasticity of demand for private health insurance is...

Discuss what is meant by the statement, "income elasticity of demand for private health insurance is positive" (?).

While we will discuss the Affordable Care Act in greater detail in Unit Four, was there any aspect of chapter 10 (entitled, "The Demand for Health Insurance") that changed your mind about any aspect of the Affordable Care Act?

Expert Solution

Income elasticity measures the responsiveness of quantity which is demanded to the change in income. That means the demand for private health insurance increases due to an increase in demand level led by higher income levels.

The Affordable care act provides subsidies such as tax credits, and this lowers household costs. Demand for health insurance is a function of price, thus affordable care act is a great mechanism to indirectly lower prices for consumers, which is made clear through increased demand.

Rahul Sunny answered 2 years ago

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