Exam 2 Microeconomics

improve health care by

1) improving food distribution 2) improving sanitary conditions 3) accelerating medical research

Which of the following are among its major​ provisions?

1) requires every firm with more than 200 employees to offer health insurance 2) Expands eligibility for medicare and establishes an advisory board with the power to reduce Medicare payments if needed 3) increases taxes on workers with incomes above $200,000

Which of the following statements is true about the health of people in the United States during the past 150​ years?

A. Infant mortality has decreased. B. The average person has become taller. C. Life expectancy has more than doubled

Why would supporters of​ market-based reforms to health care propose to make the tax treatment of​ employer-provided health insurance the same as the tax treatment of​ individually-purchased health​ insurance?

A. This change would result in a reduction in​ employers' spending on health insurance policies for employees. B. This change would result in a reduction in health insurance premiums. C. This change would result in an increase in​ employees' out-of-pocket spending on health care.

Some objections raised by economists to​ Fogel's analysis of the drivers behind increases in spending on health care cite its

A. lack of attention to​ short-run financing considerations. B. failure to adequately assess the role of distorted price signals for buyers of health care. C. ​de-emphasis of cost​ factors, particularly those related to technological change.

What attributes of the Social Security retirement system make it a program of social​ insurance? ​

B. It provides a means of spreading the risk of bad outcomes. This is the correct answer. C. It is a transfer program.

Which of the following is one of the major reasons for the improvement in U.S. health in the last two​ centuries?

A. advances in medical equipment and prescription drugs B. better sanitation C. improvements in the distribution of food

An externality

A. interferes with the economic efficiency of a market equilibrium. B. refers to a benefit or cost of an economic activity that affects someone who is not directly associated with it. C. may require government intervention.

adverse selection

the situation in which one party to a transction takes advantage of knowing more than the other party to the transaction

Health​ care, as a​ good, is best described​ by:

A. Health care should be supplied by the government because it generates positive externalities. B. Health care should not be supplied by the government because the private market preserves incentives to improve health care with innovation and medical technology.

UK

The government owns most hospitals and employs most​ doctors, so the health care system is referred to as socialized medicine.

Which of the following refers to the​ principal-agent problem in the market for health​ care?

Doctors pursuing their own interests rather than the interests of their patients.

Which of the following is the health care reform legislation passed by Congressed and signed by President Obama in March​ 2010?

The Patient Protection and Affordable Care Act

Should Congress and the president be concerned about the growth of Medicare​ spending?

Yes, since most​ observers/analysts see unrestrained growth in spending as having the potential to undermine the financial health and stability of the government.

health insurance

a contract under which buyer agrees to make payments or premiums in exchange for the provider's agreeing to pay some or all of the buyer's medical bills

socialized medicine

a health care system under which the government owns most of the hospitals and employes most of the doctors

principal agent problem

a problem caused by agents pursuing their own interests rather than the interests of the principals who hired them

asymmetric information

a situation in which one party to an economic transaction has less information than the other party

single player health care system

a system such as the one canada in which the government providers health insurance to all of the country's residents

fee-for-service

a system under which doctors and hospitals receive a payment for each service they provide

Rationing decisions

aimed at controlling the distribution of scarce resources

health care outcome

any indicator of societal health

normal goods

as income per person​ increases, so does health care spending per person.

If the federal government started taxing employees on the value of the​ employer-provided health​ insurance, the value of the​ employer-provided health care benefit would

become less​ valuable, and firms would need to raise wages to compensate for this lost value to keep total compensation the same.

In the market for health​ insurance, asymmetric information problems arise because

buyers of health insurance policies always know more about the state of their health than do the insurance companies.

market based reforms

changes in the market for health care that would make it more like the markets for other goods and services

U.S. Department of Health and Human​ Services, Centers for Medicare​ & Medicaid Services.

consumers of health care have been directly paying for only a small fraction of the true cost of providing health care

marginal social benefit in represented by which curve?

d2 (positive side)

We might measure the efficiency of a​ country's health care sector by

examining indicators of​ citizens' health and the cost of resources devoted to health care.

If the efficiency of the U.S. health care sector​ improves, it will be likely to employ

fewer​ workers, because the outcomes will be realized with a lower​ cost, or there will be better outcomes for the same cost.

Health Care

goods and services, such as prescription drugs, consultation with doctors and surgeries that are intended to maintain or improve a person's health

Hospitals and doctors sometimes perform tests that may not be of any value to patients because

health care providers are paid for each service they render. Because their insurance covers most or all of the cost of unnecessary​ procedures, patients are more likely to accept them than if they had to pay the full cost from their own funds. The​ pay-for-service aspect of health insurance worsens the​ principal-agent problem since health care providers are paid for each service they render.

patient protection and affordable care act (ACA)

health care reform legislation passed by congress and signed by president barack obama in 2010

health care fact 1

improving health care is part of improving living standard

Assume that an improvement in medical technology results in an increase in life expectancy for people 65 years of age and older. This technological advance is likely to

increase expenditures on health care because aging people require increasing levels of health care.

Improvements in the health of the average American caused the U.S. production possibilities frontier to shift out primarily by

increasing the​ country's effective workforce

Which of the following terms refers to the problem in which one person with no deductible on his or her health insurance policy tends to engage in a less healthy lifestyle than another person with a high insurance​ deductible?

moral hazard

Compared to other​ countries, the U.S. health care sector is

more efficient in some areas and less efficient in others.

All of the following health indicators are less favorable in the United States than in Japan Japan except

the mortality ratio for cancer

If the federal government were to require that employer health care plans have deductibles that were no greater than​ $200 per​ year, the employees in these plans would be better off if

the premiums increased along with the lower deductible.

Which of the following is one of the difficulties in making​ cross-country comparisons in health care​ outcomes

. Countries may have different lifestyle choices that affect health care outcomes apart from the effectiveness of the​ countries' health care system. B. Countries do not deliver health care services in the same way. C. Countries do not always collect health care related data in the same way.

Which of the following is a provision of the Patient Protection and Affordable Care​ Act?

. Every firm with more than 200 employees is required to offer health insurance to its employees. B. Insurance companies are required to participate in a​ high-risk pool that will insure individuals with​ pre-existing medical conditions. C. Each state will have an Affordable Insurance Exchange.

Which of the following accurately describe changes over time in the health of the average person in the United States

1) Life expectancy at birth has increased 2) The likelihood of death in the first months of life has fallen 3) Mortality rates have decreased. 4) Obesity has increased.

In which of the following ways is the market for health care in the United States similar to the markets for other goods and​ services?

1) health care sellers are primarily private firms 2) consumers of health care make the decisions about how much they wish to consume

Health insurance companies deal with asymmetric information problems by

1) requiring policyholders to play a deductible 2) requiring applicants to submit medical records 3) limiting the coverage of pre-existing conditions

Criticisms of the ACA made by economists and policymakers favoring​ market-based reforms​ include: ​

A. Costs will not be reduced nor will efficiency improve because ACA fails to inject sufficient competition into the health care market. B. The ACA makes the market for health care less like the markets for other goods and services. C. Under​ ACA, inaccurate signals will continue to be received by both consumers and suppliers.

Which of the following factors explain the other 90 percent of the​ increase?

A. Low rates of productivity in the health care sector. B. The introduction of higher cost drugs and medical equipment. C. Excessive​ paperwork, duplication, and waste. D. Malpractice​ lawsuits, including the costs of unnecessary tests and procedures.

In attempting to compare health care outcomes across​ countries, a problem encountered is

A. a lack of data consistency. B. distinguishing health care effectiveness from lifestyle choices. C. getting an accurate measurement of health care delivery. D. properly assessing consumer preferences

By shifting the costs of Medicare to​ beneficiaries, the growth of Medicare spending may be restrained since

A. health care consumers will become more knowledable about the effectiveness and value of health care services. B. beneficiaries will be more prudent when it comes to choosing which health care services to acquire. C. consumers will demand fewer health care services than they would if a third party pays most of the bill.

Which of the following have been offered by economists to explain the rapid increase in health care spending in the United​ States? ​

B. The development of advanced medical technology and new prescription drugs. C. A slow rate of growth of labor productivity in health care. D. Distorted economic incentives for consumers and suppliers of health care. E. An aging U.S. population.

Criticisms of the ACA made by economists and policymakers who believe that the federal government should have a larger role in the health care system include all of the following

B. the reforms​ don't go far enough in emulating the Canadian and European health care systems. C. information problems and externalities in the market for health care will continue under ACA. D. the system under ACA will have administrative costs higher than if government involvement was greater.

Why is it rational for healthy people not to buy health​ insurance?

Because healthy people perceive little risk of becoming​ sick, they anticipate having small or negligible medical bills and hence see little benefit from purchasing health insurance.

"The reluctance of healthy young adults to buy medical insurance creates a moral hazard problem for insurance​ companies."

Disagree. Moral hazard becomes a problem after one purchases insurance. In this​ case, the reluctance of​ young, healthy adults to purchase insurance in the first place leads to an adverse selection problem

Is there another economic explanation long dash —apart from fear of lawsuits long dash —for why doctors may end up ordering unnecessary tests and other medical​ procedures?

Doctors and other health professionals may order the tests and procedures as a means of​ revenue-enhancement for themselves and their practices. The motivation may be particularly strong when they know that someone other than their patients will be picking up the tab.

Japan

Has a system of universal health insurance under which every resident is required to either enroll in a​ non-profit health insurance society or in a government health insurance program

Canada

Has a ​single-payer health care system where the government provides national health insurance to all residents.

USA

Most people have private health insurance through​ employers, with the government also providing insurance to the​ poor, aged, and military veterans.

Which of the following is an example of a way in which health insurance companies have dealt with the problem of adverse​ selection?

Limiting insurance coverage on​ pre-existing conditions is an example of a way in which health insurance companies have dealt with the problem of adverse selection.

Which of the following are examples of activities that generate externalities in the market for health​ care? ​

People receiving vaccinations against infectious diseases. This is the correct answer. B. Individuals engaging in injurious or reckless lifestyle choices.

Do you agree that health insurance is meant for people who end up getting​ sick?

Since all individuals face some risk of​ sickness, all can benefit from the purchase of health insurance. The trick is to establish premiums based on each​ individual's inherent risk. The more that premiums are tailored to​ individuals, the more likely that individuals will buy insurance before the point of need.​ Low-risk individuals pay low​ premiums, high-risk individuals pay high premiums.

Which of the following statements is true of health care spending in the United​ States?

Spending on health care as a percentage of GDP more than doubled between 1965 and 2015.

The Patient Protection and Affordable Care Act​ (ACA)

The PPACA was enacted in 2010 to significantly reorganize the U.S. health care system.

What insight into the health and​ well-being of the U.S. population might the decline in height​ provide?

The decline in height occurred because improvements in transportation and mobility brought people into greater contact with diseases

US spending on health care

U.S. spending on health care was less than 6 percent of GDP in​ 1965, but had risen to about 17.5 percent in​ 2011, and is projected to rise to about 19.5 percent in 2019.

The situation described here​ (of healthy people not subsidizing sick people through the purchase of​ insurance) is a problem for a system of health insurance since it

When healthy​ (low-risk) individuals do not purchase health​ insurance, a problem arises for the insurance system since insurance premiums become excessively​ high, the adverse selection problem is​ accentuated, and losses are inflicted upon insurers.

In terms of comparisons in health care outcomes across​ countries, the​ economist's observation

has relevance because health care outcomes are affected by many different factors and can be difficult to measure.

adverse selection problem

is that it undermines the ability of insurance to provide the benefit of sharing risk.

health care fact 3

it is a normal good

health care fact 2

it is provided like any other goods and services

The success of health care systems of different countries in extending the lives of the very sick

may be measured by examining​ illness/disease mortality ratios

free at the point of​ delivery

means there is no charge to the health care system user.

Which of the following terms refers to what occurs when a person gets a vaccination against a disease and that action reduces the chances that other people will contract that​ disease?

positive externality

What is the term for the payment that a buyer agrees to make in a health insurance contract in exchange for the provider agreeing to pay some or all of the​ buyer's medical​ bills?

premium

financial assistance

premium supports

A news story notes that some features of the U.S. health care system contribute​ "to the high cost of medical care by encouraging hospitals and doctors to perform tests and procedures regardless of the value to a​ patient."

prevalence of patient health insurance in the United States that results in the​ principal-agent problem.

Young healthy people must be forced to participate in health reform because they are needed to

provide a subsidy to older sicker people.

The ACA

provides tax credits to​ low-income individuals and small businesses with 25 or fewer employees.

While this normative question has no definite correct or incorrect​ answer, it seems reasonable to expect that any health care system​ would, at a minimum and through multiple​ avenues,

reduce human suffering.

projected increases in health care spending as a percentage of GDP (()) be of concern to policymakers

should not

moral hazard

the action people take after they have entered into a transaction tha make the other party to the transaction worse off

Such data ( collection ) can be important in evaluating the effectiveness of a​ country's health care system because

the benefit may be greater than the cost of gathering the data.

Patients with health insurance do not exhibit high price sensitivity to​ providers' costs because

the insurance company often covers the majority of the cost.

a health economist observed that​ "it's very hard to measure the things we really care​ about, like quality of life and improvements in​ functioning It is difficult to measure outcomes like these because

there is no one statistic that measures outcomes like these.

Adverse selection refers

to making a bad choice because of not having full information before entering into a transaction. For​ example, a​ husband's secret alcoholism that only comes out after the wedding.

Moral hazard refers

to the change in behavior after a transaction that is to the detriment of another. For​ example, a spouse letting their appearance go once they are off the dating market.

With​ high-deductible plans, people

will hesitate to go to a doctor to avoid the cost outlay

If the federal government were to require that employer health care plans have deductibles that were no greater than​ $200 per​ year, the employers with these plans would be

worse off because the​ premium, and their share of the​ premium, would be higher.

Is health care actually free to residents of the United​ Kingdom?

​No, because they pay for these services through their taxes.

Which of the following is the way in which the largest number of people obtain health insurance in the United​ States?

​employer-provided insurance plans

Health care in the United States could become an inferior good if

advances in medical technology allow better and less costly treatment of disease and cures for diseases that are now expensive to​ treat, so that expenditures on health care could decline as incomes rise. This is the correct answer.

decline in death rates in 1981 in US

was due to the change in lifestyle

Which of the following is one of the major reasons for rapid increases in health care spending in the United​ States?

Advances in medical technology and new prescription drugs that have higher costs is one of the major reasons for rapid increases in health care spending in the United States.

Which of the following examples most accurately describes adverse selection and moral hazard in​ marriage?

Adverse selection because the​ husband's secret alcoholism comes out after the wedding. Moral hazard because a spouse lets their appearance go after marriage

Which of the following terms refers to the situation in which one party to an economic transaction takes advantage of knowing more than the other party to the​ transaction?

Adverse selection is the situation in which one party to an economic transaction takes advantage of knowing more than the other party to the transaction.

expansion of the economy

An expansion of the​ economy's productive capacity is represented graphically as an outward shift in the production possibilities frontier. Much like a technological​ advance, the public health movement in the United States in the late nineteenth and early twentieth centuries increased the​ country's productive​ capacity, doing so by increasing the size and effectiveness of the​ country's labor force.

efficient quantity of medical services is

At the efficient level the marginal benefit to consumers from medical services would equal the marginal cost of producing the services and the equilibrium quantity would be at the efficient level Q1. In this​ equilibrium, the quantity of medical services produced increases to Q2​, which is beyond the efficient level. The marginal cost of producing these additional units is greater than the marginal benefit consumers receive from them.

Compared with those of other​ high-income countries, health care outcomes in the United States are

Compared with those of other​ high-income countries, health care outcomes in the United States are superior in some cases​ (e.g., mortality ratio for​ cancer, access to MRI units and CT​ scanners) and inferior in others​ (e.g., infant mortality and​ obesity).

employer mandate

Firms with more than 50 full minus −time employees must offer health insurance or pay a​ $3,000 fine to the federal government for every employee who receives a tax credit from the federal government for obtaining health insurance through a health insurance marketplace.

Governments do not currently collect such data because

To justify collecting data on how soon after surgery patients get back to​ work, governments would need a sufficient reason to justify the cost of doing so.

The marginal social benefit from vaccinations is greater than the marginal private benefit to people being vaccinated.

True