Question

Explain medical care markets at the macroeconomic level using a production possibilities frontier (ppf) where medical care is depicted on the vertical axis and all other goods and services are depicted on the horizontal axis. What is the goal of risk sharing in medical care markets at the macroeconomic level? Namely, where do you expect to be producing relative to the ppf you depicted?

Answer 1

PPF is shifted more towards other goods and services which shows that we consumes more of other goods services and approximately half of medical care.

Risk sharing in the medical care market refers to the medical insurance which we take from private agencies and pays the premium amount and share our risk with them in case of any uncertainty. It totally depends upon the company from which you have taken the insurance that how much they will contribute to the total billing in case you met with uncertainty. It depends also upon the type of insurance plan you choose. The goal of risk sharing is that people take insurance for their precious lives as this makes the economy wealthy and healthy, it puts less pressure on the government to spend on poor people for their medical expenses, it improves the healthcare system as people will have their routine checkups once they have the medical claim.

I have drawn a circle, i assume we are in this circle under PPF(attainable point), where consumption on other goods and services is high as we tend to consume other goods and gives less preference to the medical care.