Discussion Two: Health Care and Incentives

  1. You go out to dinner with a group (friends or family or co-workers). Does your choice of what dish to order depend on whether you are going to pay for your own meal, or if someone else is paying? Does it matter who is paying (your dad, your friend, your employer)? Explain and discuss.
  2. Most of the people who have health care coverage in the United States are covered by a third party payer (Medicaid, Medicare, or an insurance company.) How does the amount and type of health care products and services (doctor’s visits, hospital procedures, drugs, medical devices) consumers choose to purchase depend on whether they have such third party coverage or not?
  3. Some of our individual needs for health care services later in life are determined by choices we ourselves make earlier in life regarding our individual lifestyle. If you believe you will be covered by insurance or other third party payers later in life, how might this influence your individual behavior while young, and hence total demand for health care services for older people? For extra points: discuss how this question relates to the issue of “moral hazard”.
  4. Why do you think we see so many ads on TV these days for Cialis, Ambien, Viagra, and other prescription drugs? Why are these drugs being marketed directly to the consumer?