Since the introduction of the Impanian National Health scheme, Impanians (or their private insurance companies) have ...

avif on June 4, 2020


I got this one right more by eliminating answers which didn't make sense than by understanding the correct answer. Can someone please explain what is going on here. Thanks

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Victoria on June 11, 2020

Hi @avif,

Happy to help!

What is the paradox here?

It was expected that the cost of private health insurance would decrease after the introduction of the National Health scheme as insurers would no longer be paying for the bulk of health care costs. However, the cost of private health insurance has dramatically increased since the scheme was introduced.

There are two reasons why answer choice (D) might explain this paradox.

(1) Impanians only buy private insurance when they need unusual and sophisticated procedures. Therefore, insurance companies would be paying out more as only those requiring medical care purchase the insurance and would likely increase the price of insurance to offset their costs.

(2) Insurance companies would also likely charge higher prices outright as the demand for private insurance would have decreased dramatically following the implementation of the National Health scheme.

Hope this helps! Please let us know if you have any further questions.

avif on June 11, 2020