Module 1, Part 2: Risk Premiums and WTP for Health Insurance

This section of the class is all about calculating risk premiums and willingness-to-pay for health insurance.

Objectives

  • Explain and draw graphically how the risk premium varies with the curvature of the utility function, probability of illness, and amount of potential loss
  • Calculate risk premium and willingness-to-pay for health insurance
  • Discuss viability of high-risk pools

Activities

  • Supplemental information about insurance (and uninsurance) in the US, available here and here
  • In-class problem on the demand for health insurance. The worksheet is here.

Slides

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