Research Study

Research Study

Research Study
In this paper two hypotheses will be discussed from the article: Healthcare, Insurance, and the Contract Choice Effect (Dusanky & Koq, 2006). The hypothesis involves the interdependence of an individual’s demand for medical care and a choice of insurance coverage for their medical care. The null hypothesis illustrates the direct interdependence between price and coverage. An emphasis on the implications between demand behavior and the empirical analysis is also discussed. Because this is an economic hypothesis the culture of today’s consumers must be noted. A price increase of medical care causes two effects on demand to occur. First, there is a decrease or reduced demand in quantity of medical care and a contract choice change effect. As consumers decrease their demand because of increased cost and decreased medical benefit they demand a variety of contract choices that are tailored to their demand. In the past this contract choice has been neglected by researchers and its affect on medical care coverage. This effect alters the quantitative and qualitative properties used in prediction studies of medical care demand.
Consumers have some ability to predict, on a basic scale, how much medical care they will need (if they are in a normal health condition). This understanding affects the choice plan architecture of the insurance coverage choices and the cost sharing plans. As medical care cost increase consumers may be willing to pay a higher premium for a choice plan with greater benefits if the cost share is less per visit. This demand curve will increase as consumers require more for their money and will pay the higher premium for service. This effect is opposite from the normal demand curve that will decrease as price increases. These insurance plans have varying attributes or characteristics that can be formatted for the price. Co-pay, deductible per family or person, cost sharing, preferred provider, in network, out of network, etc.,...

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