Relative to when a patient has first-dollar medical insurance, the loss in total economic surplus would be smaller if:
A)medical care providers had to pay the full marginal cost of medical care.
B)medical care providers had to pay more of the marginal cost of medical care.
C)the patient had to pay less of the marginal cost of medical care.
D)the patient had to pay at least some of the marginal cost of medical care.

Question

Quizplus · Accepted Answer

When patients have first-dollar medical insurance, they have little incentive to be cost-conscious when seeking medical care, leading to overutilization of medical services. By requiring patients to pay at least some of the marginal cost of medical care, they would have more of a financial stake in their healthcare decisions and be more likely to consider the costs of various treatment options. This would lead to a reduction in overutilization of medical services, resulting in a smaller loss in total economic surplus. Choices A, B, and C all place more financial burden on medical care providers or patients, which may not be feasible or equitable solutions to the problem of overutilization.

Relative to When a Patient Has First-Dollar Medical Insurance, the Loss