Explain how health insurance results in the overuse of health care? (Answer should discuss the moral...

Explain how health insurance results in the overuse of health care? (Answer should discuss the moral hazard issue associated with health insurance.) If so, how can we measure this inefficiency? Draw a diagram (where y-axis is the price of health care and x-axis is health care quantity) to answer the question.

Expert Solution

Health insurance in high incomr countries leads to overuse as the healthcare services are more demanded by households and thus leads to increase in cost as well as increase in supplementary services which are uneeded and hence leads to inefficiency.

Measuring this inefficiency is complex as the ever increasing needs of health care services and its accessibility cannot be measured effectively .

This inefficiency is also termed as consumers surplus.

Rahul Sunny answered 2 years ago

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