Question

suppose that co-payments are set at $20 per doctor visit and quantity demanded is $60 from patients
in order for doctors to supply 60 doctor visits the price has to be $100
suppose that in a regular market ( no third party), the equilibrium price is $60 and the quantity is 30
1. what are the total out of pocket cost for patients
2.what are the total third party payer costs

Answer 1

total out of pocket cost for patients

Take 20$ as the co payments for doctors

and 60 the no of patients

a) 20$*60=1200$

To establish the third payer cost we need to calculate the insurance costs incurred by a patient

'b ) third party insurance costs

80*60=4800$

Total costs in a third payer market is then given by adding out of pocket costs and adding third party insurance costs

1200$+4800 $=6000$