Reference pricing is insurance concept

Assignment Help Financial Management

Reference no: EM131865991

“Reference pricing” is an insurance concept used in parts of Europe where an individual with an illness receives a certain dollar amount to treat that illness and can use that dollar amount in any way. For example, if an appendectomy costs $8,000 on average the individual in “need” of an appendectomy would receive $8,000. They could use that to go to a less expensive hospital, pay $6,000 and keep $2,000, or go to a more expensive hospital costing $10,000 and use the $8,000 towards the $10,000 bill. Or they could just keep the $8,000 and deal with a painful appendix.

a) Do you think this would improve market efficiency?

b) How would this impact moral hazard in this market?

c) Can you think of two other market issues this might create?

Reference no: EM131865991

Questions Cloud

European vanilla options in the black-scholes-merton model : When valuing European Vanilla Options in the Black-Scholes-Merton Model, there is one source of uncertainty.

What was the equipment''s purchase price : A second piece of equipment was purchased for cash. Based on these facts, what was the equipment's purchase price

How osteoporosis develops and the potential causes : Research osteoporosis disease using a minimum of 2 sources and address the following: Explain how osteoporosis develops and the potential causes.

Explain how multiple sclerosis affects the nervous system : Being the caring friend you are, you wish to know more about the condition and how you can best support your friend. You decide to research this disease further

Reference pricing is insurance concept : “Reference pricing” is an insurance concept used in parts of Europe where an individual with an illness receives a certain dollar amount to treat

What is joseph''s tax basis in his partnership interest : Joseph contributed $46,500 in cash and equipment with a tax basis of $12,300, What is Joseph's tax basis in his partnership interest

Describe the functions of the differentiated cells : Describe the activation, proliferation and differention of T cells and B cells and briefly describe the functions of the differentiated cells.

Difference between compartments and complements : What is the difference between compartments and complements while pursuing a network strategy. Please give me a set of examples for each from an ecosystem.

What is the present value of her winnings : She'll be paid $1 million per year for 25 years with her first payment coming today. At a 6% discount rate, what is the present value of her winnings?

User Account

All Pages