Some are increasing the co-payments on drugs, the prices of which are rising fast. One type of drug plan charges more for name-brand drugs than generic drugs. Yet others are encouraging employees to use health care less, such as through smoking cessation programs, or face higher premiums. However, there is a great deal of variation. Where the employers are afraid that workers might quit as a result, such as among skilled workers or in the hi-tech sector, they are more reluctant to increase employee contributions.
Large companies are also more likely to absorb health-care cost increases.
Refer to the determinants of the elasticity of demand. Explain your answer. Draw a diagram of the demand for prescription drugs. The news story states that skilled workers are less likely to experience increases in premiums. Explain your response.