Chapter 19 - Assignment 2: Medical Savings Accounts

Read the article on "The Economic Case for Medical Savings Accounts," by John C. Goodman and Gerald L. Musgrave.
  1. How does the government subsidize third-party insurance?
  2. Why does the current tax system result in distortions?
  3. Why might the existence of third-party insurance lead to higher levels of utilization of medical services?
  4. While HMOs tend to lower the cost of medical services, the authors argue that HMOs induce a distortion in consumer choice. Explain.
  5. Do you find their argument in support of medical savings accounts convincing? Why or why not?
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