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Consumers face a variety of challenges as health markets rarely meet the requirements for competitive markets, which allocate resources efficiently. Match each of the challenges listed below with the example that best illustrates it.

1. Information asymmetry
- Doctors in a given specialty do not report on the mix of patients they treat by diagnosis and treatment categories and their outcomes.

2. Barriers to entry
- Information technology systems required of many health care providers and health insurance companies cost millions of dollars to license, configure, and implement.

3. Lack of price transparency
- Hospitals prefer to incur the risk of modest government fines rather than making publicly available information on how much they charge for common types of procedures to different groups of customers.

4. High search costs
- Patients have to schedule individual appointments with each of multiple potential doctors to gather information about how they would treat the patient's specific condition(s), including their rationale as to why (pros and cons).

5. Negative externalities
- Individuals who do not receive a COVID-19 vaccination increase the risk of others contracting it and of vaccine-resistant strains of the virus developing and spreading.

6. Producer/supplier market power
- Large hospital systems are able to negotiate higher payment rates than smaller hospitals from private health insurance programs, without any evidence of higher quality being provided.

Answer Bank:
1. Information asymmetry
2. Lack of price transparency
3. High search costs
4. Negative externalities
5. Producer/supplier market power
6. Barriers to entry

Answer :

Final answer:

The challenges faced by consumers in health markets include information asymmetry, lack of price transparency, high search costs, negative externalities, producer/supplier market power, and barriers to entry.

Explanation:

In health markets, consumers face various challenges that hinder the efficient allocation of resources. These challenges include:

  1. Information asymmetry: This occurs when there is an imbalance of information between consumers and healthcare providers. For example, doctors in a given specialty may not report on the mix of patients they treat by diagnosis and treatment categories and their outcomes.
  2. Lack of price transparency: Consumers often struggle to access information about the costs of healthcare services. For instance, hospitals may prefer to incur the risk of modest government fines rather than making publicly available information on how much they charge for common types of procedures to different groups of customers.
  3. High search costs: Patients may have to schedule individual appointments with multiple potential doctors to gather information about how they would treat their specific condition(s). This includes understanding the pros and cons of different treatment options.
  4. Negative externalities: The actions of individuals who do not receive a COVID-19 vaccination can increase the risk of others contracting the virus and the development of vaccine-resistant strains.
  5. Producer/supplier market power: Large hospital systems may have the ability to negotiate higher payment rates from private health insurance programs without providing evidence of higher quality.
  6. Barriers to entry: Certain barriers prevent new competitors from entering the healthcare market, limiting competition and potentially leading to higher prices and lower quality of care.

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