Questions: Question 5 2.5 points Save Answer The government wants to make medicare benefits available to more people, but to achieve this goal, it needs to make cuts in the existing medicare budget. The two areas where they are considering cuts are non-essential elective surgery and 6-12 month mental health care programs. Applying the concept of diminishing marginal utility, the budget cuts should be made for spending on mental health therapy due to its higher marginal return rate. True False

To determine whether the statement is true or false, we need to apply the concept of diminishing marginal utility and consider the implications of budget cuts in the context of Medicare benefits.

Diminishing Marginal Utility: This economic principle suggests that as a person consumes more of a good or service, the additional satisfaction (utility) gained from consuming each additional unit decreases. In the context of healthcare, this principle can be applied to understand how the value or benefit of additional healthcare services might decrease as more services are provided.

Non-Essential Elective Surgery vs. Mental Health Care Programs:

1. Non-Essential Elective Surgery: These are surgeries that are not immediately necessary for the patient's health and can often be postponed without significant risk. The utility derived from these surgeries might be lower compared to essential medical services.

2. 6-12 Month Mental Health Care Programs: These programs provide ongoing support and treatment for individuals with mental health issues. The utility of mental health care can be significant, as it can lead to improved quality of life, better social functioning, and reduced long-term healthcare costs.

Marginal Return Rate: This refers to the additional benefit received from spending an additional unit of resources. In healthcare, this could mean the improvement in patient outcomes or quality of life per dollar spent.

• Mental Health Care Programs: These programs often have a high marginal return rate because they can prevent more severe health issues in the future, reduce the need for emergency care, and improve overall well-being. Cutting funding in this area might lead to higher long-term costs and reduced patient outcomes.

• Non-Essential Elective Surgery: The marginal utility of these surgeries might be lower, as they are not critical to immediate health and can often be delayed without significant consequences.

Given the concept of diminishing marginal utility and the potential long-term benefits of mental health care, it would be more logical to consider cuts in non-essential elective surgeries rather than mental health programs. Therefore, the statement that budget cuts should be made for spending on mental health therapy due to its higher marginal return rate is:

False