Question

4) Use Newhouse's Quantity Quality model (Qam) to analyze the effects of an INCREASE IN THE NUMBER OF PERSONS WITH HEALTH INSURANCE COVERAGE IN THE HOSPITAL'S MARKET AREA on the hospital's optimal choice of quantity and quality. (hint: To answer this question correctly, you will have to set up the entire Qgm model, AND THEN, increase the number of persons with health insurance).

Answer 1

Answer: (W using Newhouse's quantity Quality model analysing the effects of an increase in the number of persons with health insurance coverage in the hospitals market area: → According to new house the prestige of hospital is increased by the level of Service it provides.. - administratieon not judged by profit levels . •Prestige influenced by size, but more than this by quality medical staf likes quality, Quality in part equated with excess capacity - easier to get one's patients admitted if there is lot of 'Capacity when there is increase in the number of persons with health insurance Coverage in the hospitals market area, more people will visit the hospital for treatment and due to insurance they do not have to borne expenditure

and most of it will be reimporsed by the insurance Company There will be increase in avantity doe to this and patient will be happy and satisfied when hospital Provides all service and facilities of mentioned by the hospital.. ! • As no of persons with health insurance coverage increases, quality of the service will decrease and quantity of hospitals will inereage. . so the optimal choice of choosing hospitals deperid on trade off between the quality of the hospital and I quantity and the final optimal choice of the individual bated on hospitals, capability to provide the kind of the service people with insurance coverage need!