Health Economics Final (chpt 1-5,11,12)

A variable payment reimbursement system with low out-of-pocket expenses carries a ________________ of large amounts of medical services. a. High likelihood b. Moderate likelihood c. Low likelihood d. Very low likelihood e. None of the above

A

Lost wages due to a medical disability is an example of __________. a. Direct medical care costs b. direct nonmedical costs c. Indirect costs d. deadweight loss e. None of the above

C

Not-for-profit firms rely on ____________ for initial capital. a. ownership investments b. pre-orders c. donations d. tax exemptions e. non-distribution constraints

C

Switzerland's health care system can be best described as ____________. a. national health insurance b. socialized health insurance c. managed competition d. public contracting e. pluralistic

C

Time costs of acquiring medical care are considered ________. a. direct non-medical costs b. direct medical costs c. opportunity costs d. both a and b e both a and c

C

The two major types of public health insurance in the U.S. are ____________. a. Blue Cross and Blue Shield b. Blue shield and Medicaid c. Blue Cross and Medicare d. Medicare and Blue Shield e. Medicare and Medicaid

E

An increased HMO presence in insurance markets will likely increase premiums for consumers. T/F

F

A negative income elasticity of demand for out-patient services would imply that it is an inferior good. T/F

T

Better macroeconomic conditions have a positive overall impact on health. T/F

F.

Economists assume people behave rationally. If this were true, then the U.S. Surgeon General would only make decisions that benefit him/her financially. T/F

F.

If all statues limited the roles of physician assistants were lifted, the level of competition in the physician services market would decrease. T/F

F.

There is a constant relationship between increases in health and utility. T/F

F.

Among developed countries, the U.S. has the lowest infant mortality rate. T/F

F. Belgium, Japan, UK, France, and Italy have a lower infant mortality rate than the US

Cost-effectiveness analysis is useful in deciding if public funds should be spent on military personnel or public health initiatives. T/F

F. Cost benefit analysis

Cost-utility analysis assumes that life-years added due to a medical intervention are homogeneous. T/F

F. Cost utility analysis considers the number of life-years saved from a particular medical intervention and the quality of life. The number of life years is adjusted by some index that reflects health status or quality of life.

Since the demand for medical care is derived from the demand for good health, an increase in income will decrease the demand for medical care. T/F

F. Increase in income will increase the demand for medical care

Fee-for-service reimbursement systems help reduce health care expenditures. T/F

F. Increase. Fee-for-service is when doctors and other health care professionals receive payment based on their charges for services provided.

The purchase of insurance eliminates the risk of financial loss for all parties. T/F

F. Insurance is a risk-sharing business. One cannot eliminate the risk with insurance, it just provides a means for covering losses

The reduction in the number of reported polio cases was due largely to government health programs. T/F

F. It was due to public health interventions and specifically the polio vaccination.

All points along the production possibilities frontier maximize equity. T/F

F. Only the points on the curve are efficient outputs. Points inside the curve means that not all the resources are utilized, and points outside the curve represents what is not yet attainable

Opportunity costs only occur when there is a government involvement in markets such as health care. T/F

F. Opportunity costs can occur in markets even without any government involvement

Process quality refers to the physical and human resources of the medical care organization. T/F

F. Process quality is is the quality of medical care as measured by the quality of treatment

Rationality implies that people will always make the correct choice. T/F

F. Rationality is someone who will not purposefully make themselves worse off and make decisions that will maximize the level of utility

The __________ states that an individual's income relative to some social group average impacts health. a. absolute income hypothesis b. relative income hypothesis c. relative position hypothesis d. income inequality hypothesis e. absolute position hypothesis

B

Cost-effectiveness analysis assumes that _____________. a. the outcome is desirable b. the marginal benefit is greater than the marginal cost c. time trade-off d. discounting e. both b and d

A

Failure to achieve the maximum total net societal benefit (TNSB) results in some amount of ____________. a. deadweight loss b. negative TNSB c. increasing opportunity costs d. unnecessary direct costs e. diminishing marginal productivity

A

Individuals who have access to large-group coverage are ___________ likely to fall victim of cherry-picking behavior because the total cost of health insurance is distributed among a ___________ number of subscribers. a. less; larger b. more; larger c. less; smaller d. equally; similar e. equally; larger

A

The ________ suggest that per capita variations int he use of medical care are due to variations in clinical opinions regarding the appropriate amount and type of medical care. a. physician practice hypothesis b. supplier-induced demand hypothesis c. enthusiasm hypothesis d. principal-agent hypothesis e. small are variation hypothesis

A

The _________ refers to how much more or less of a product consumers buy when its price changes. a. intensive margin b. extensive margin c. nominal demand d. effective demand e. fuzzy demand

A

The ____________ refers to the impact a lower price for medical care has on the real purchasing power of consumers. a. income effect b. inflation rate c. effective demand d. substitution effect e. nominal demand

A

Which of the following best describes productive efficiency? a. Producing a medical service at the lowest possible cost. b. Constructing a new medical facility to exactly offset a market shortage of such services c. Increasing the amount of hospital beds available such that each person in the population served has a bed allocated to him/her d. None of the above e. More than one of the above statements is true

A

Which of the following is not a basic question that must be answered as a result of scarcity? a. Who should decide the amount of money spent on medical goods and services? b. Who should receive the medical goods and services that are produced? c. What mix of nonmedical and medical goods and services should be produced in the macroeconomy? d. What specific health care resources should be used to produced the chosen medical goods and services? e. What mix of medical goods and services should be produced in the health economy?

A

Which of the following is not a characteristic of medical care that distinguishes it from other goods? a. Investment b. Inventory c. Intangibility d. Inconsistency e. Inseparability

A

Which of the following might occur after acquiring health insurance due to moral hazard? a. A consumer visits a doctor more frequently b. A consumer washes his/her hands more frequently c. A consumer eats healthier d. All of the above e. None of the above

A

Which of the following payment mechanism provides the greatest incentive to over utilize medical care? a. Fee-for-service b. fixed salary c. Capitation d. Pay-for-performance e. Price controls

A

___________ is the situation where insured individuals alter their behavior because they are no longer financially responsible for the full cost of their behavior. a. Moral Hazard b. Asymmetric Information c. Rationality d. Scale Economies e. Adverse Selection

A

_____________ are typically the primary source of funding for medical care insurance provided by a government agency. a. Taxes b. Premiums c. Copayments d. Out-of-pocket fees e. None of the above

A

What are the two primary goals of the malpractice system? a. reduce the number of claims and deter negligence b. compensate victims and deter negligence c. reduce the number of claims and limit the size of awards d. increase the number of claims and compensate victims e. none of the above

B

The U.S market system is best described as a ____________. a. Perfect egalitarian system b. Pure market system c. Dictatorship d. Mixed distribution system e. More than one of the above statements is true

D

The _________ equates the value of a life to the market value of the output produced by an individual during his/her expected lifetime. a. willingness-to-pay approach b. cost-benefit approach c. cost-effectiveness approach d. human capital approach e. cost-utility approach

D

Any point________ the production possibilities frontier is efficient and attainable. a. inside of b. along c. outside of d. both a and b are correct e. both a and c are correct

B

Consumer demand for medical care is considered a _________ demand, as it depends on the consumer's demand for good health. a. Absolute b. derived c. relative d. supplemental e. supply-side

B

Germany's health care system can be best described as ___________. a. national health insurance b. socialized health insurance c. managed competition d. public contracting e. pluralistic

B

Money spent on transportation to a medical care provider is an example of _____________. a. Direct medical care costs b. direct nonmedical costs c. Indirect costs d. deadweight loss e. None of the above

B

The ________ refers to how many more or fewer people buy a product when its price changes. a. intensive margin b. extensive margin c. nominal demand d. effective demand e. fuzzy demand

B

Which of the following best describes allocative efficiency? a. Producing a medical service at the lowest possible cost b. Constructing a new medical facility to exactly offset a market shortage of such services. c. Increasing the amount of hospital beds available such that each person in the population served has a bed allocated to him/her d. None of the above e. More than one of the above statements is true

B

_________ refers to the exploitation of asymmetric information to increase demand for physician services. a. physician inflation rate b. supplier-induced demand c. fee-for-service d. market equilibrium e. none of the above

B

____________ occurs when consumers have less incentive to avoid risky behaviors. a. Ex post moral hazard b. Ex ante moral hazard c. Adverse selection d. asymmetric information e. none of the above

B

The _________ suggests that per capita variations in the use of medical care are due to variations in physician preference for particular medical procedures. a. physician practice hypothesis b. supplier-induced demand hypothesis c. enthusiasm hypothesis d. principal-agent hypothesis e. small are variation hypothesis

C

The concept of ______________ helps explain why some people choose not to visit their primary care physician every day. a. inseparability b. human capital c. diminishing marginal utility d. process quality e. absolute income hypothesis

C

To maximize profits, a dominant insurance provider will set the price for insurance such that the marginal revenue of providing coverage is _____________ of providing coverage. a. greater than the marginal cost b. less than the average total cost c. equal to the marginal cost d. equal to the average total cost e. none of the above

C

Using the incremental cost-effectiveness ratio, if a new medical technology represents a positive net cost and negative net effect, then __________, a. the new medical technology dominates the old medical technology b. the relative costs and benefits must be reviewed further c. the old medical technology dominates the new medical technology d. the discount rate utilized should be changed e. a standard gamble should be utilized

C

When will the marginal utility per dollar spent on medical care equal the marginal utility per dollar spent on entertainment for a consumer? a. This will only occur when the consumer becomes ill b. This will only occur when the consumer is healthy c. This will only occur if the consumer seeks to maximize utility d. This will never occur

C

The __________ states that distribution of income directly impacts health. a. absolute income hypothesis b. relative income hypothesis c. relative position hypothesis d. income inequality hypothesis e. absolute position hypothesis

D

Which of the following best illustrates the law of diminishing marginal utility? a. A physician orders additional exams to provide a more accurate diagnosis b. A person chooses the most comprehensive health insurance offered every time, regardless of the benefit of cost c. A patient chooses to visit the dentist twice a year for checkups rather than once a month d. Congress chooses to continue debating the merits of alternative health policies e. None of the above.

C

Which of the following is considered a shortcoming of the human capital approach? a. It includes nonmarket returns b. It is used to estimate the value of a human life c. It includes labor market imperfections d. All of the above e. None of the above

C

___________ has been credited as the leading cause of decreases in child mortality during the early twentieth century in the U.S. a. The polio vaccine b. Improvements in public education c. Improvements in water quality d. Medicaid e. The improving macroeconomy

C

____________ can help avoid the problem of diminishing marginal productivity of medical care. a. Increase in the number of physicians b. Increases in the number of nurses c. Advancements in medical technology d. Both a and b are correct e. All of the above

C

_____________ occurs when insurance companies structure plans that provide an incentive for healthier consumers to enroll while discouraging enrollment of higher-risk individuals. a. Moral Hazard b. Asymmetric Information c. Cherry-picking d. Guaranteed renewability e. Adverse Selection

C

_____________ reasons that firm-size classes with expanding populations are more efficient than those with shrinking populations over time. a. Moral Hazard b. Asymmetric Information c. Rationality d. Scale Economies e. Adverse Selection

C

A positive cross-price elasticity estimate between in-patient and out-patient services at a hospital would imply that the two are __________. a. normal goods b. inferior goods c. compliments d. substitutes e. unrelated

D

Discounting involves ___________ by (1+r)^t to obtain the _________. a. dividing the present value; willingness to pay b. multiplying the future value; present value c. multiplying the present value; willingness to pay d. dividing the future value; present value e. dividing the future value; willingness to pay

D

Insurance ___________ the price for medical care, thereby ________ the demand for it. a. increases; decreases b. decreases; decreases c. increases; increases d. decreases; increases e. None of the above

D

Market failure results from which of the following in the medical care market? a. Lack of fully informed consumers b. Social equity c. Externalities d. All of the above e. None of the above

D

Medical care providers in the U.S. are reimbursed through the use of __________. a. fixed payment systems b. variable payment systems c. out-of-pocket fees d. All of the above e. both a and c

D

Over the past thirty years the absolute number of physicians has ______ while the physician-to-population ration has ________. a. decreased;decreased b. decreased; increased c. increased; remained stable d. increased; increased e. increased;decreased

D

Using a staff-model HMO, if there is an increased int he wages of physicians, how would the HMO likely respond to provide its current level of medical care? a. increase the number of physicians and decreased the number of physician extenders utilized b. Decrease the number of physicians and decreased the number of physician extenders utilized. c. increase the number of physicians and increase the number of physician extenders utilized d. decrease the number of physicians and increase the number of physician extenders utilized e. none of the above

D

Which of the following accounts for the greatest number of deaths in the U.S? a. Chronic lower respiratory diseases b. Alzheimer's disease c. Diabetes mellitus d. Diseases of the heart e. Malignant neoplasms

D

Which of the following is not a method used in constructing a health-utility index? a. rating scale b. standard gamble c. time trade-off d. discounting e. both b and d

D

Which of the following reasons might explain why expenditures on physician services have increased? a. increased utilization b. increased practice costs c. increased physician incomes d. all of the above e. none of the above

D

Which of the following refers to a situation where the health insurer reimburses 100% of the amount spent on medical services? a. Patient Protection and Affordable Care Act of 2010 b. managed care c. Coinsurance d. First dollar coverage e. both c and d

D

_____________ exist when the average total cost of providing insurance coverage decreases as a firm provides coverage for larger groups of people. a. Moral Hazard b. Asymmetric Information c. Rationality d. Scale Economies e. Adverse Selection

D

_____________ help explain the law of increasing opportunity costs. a. Differing consumer preferences b. The characteristics of a pure market system c. Advancement in technology d. Imperfect substitutability of resources e. Decreases in the availability of natural resources

D

______________ is the largest source of health care funds in the U.S. a. Out-of-pocket b. Medicaid c. Medicare d. Private health insurance e. Workers' compensation

D

People obtaining health insurance as part of a group are likely to pay higher premiums than those who acquire coverage individually. T/F

F

Scale economies may serve as a barrier to entry in the private health insurance market by mandating a tiered benefit system. T/F

F

A _________ represents a fixed amount paid by the consumer that is independent of the market price or actual costs of medical care. a. deductible b. loading charge c. coinsurance rate d. claim e. copayment

E

Over the past thirty years, the absolute number of active primary care physicians has _________, while the proportion of active primary care physicians has ___________. a. decreased; decreased b. decreased; increased c. increased; remain the same d. increased; increased e. increased;decreased

E

The components of the three-legged stool of medical care are ____________. a. costs, access, efficiency b. costs, equity, access c. access, equity, efficiency d. efficiency, costs, quality e. costs, access, quality

E

Which of the following accounts for the greatest amount of health care spending? a. Public health b. Physician services c. Prescription drugs d. Nursing home care e. Hospital services

E

Which of the following countries provides universal health insurance coverage? a. United States b. Germany c. Switzerland d. United Kingdom e. Canada

E

Which of the following exemplifies the principal-agent-theory within medical care? a. The doctor-patient relationship b. The doctor-payer relationship c. The patient-payer relationship d. both a and c e. All of the above

E

Which of the following is a limitation of cost-benefit analysis? a. Difficulty choosing the correct discount rate b. Difficulty measuring the value of a human life c. Difficulty measuring the dollar value of gains/losses in utility d. Both a and c are correct e. All of the above

E

Which of the following is included in the health production function? a. Age b. State of medical technology c. Gender d. Income e. All of the above

E

Which of the following reasons might explain why health insurance purchased as a group might be less costly than coverage purchased individually? a. Greater bargaining power b. Risk spreading over a larger number of people c. Lower marketing costs for the provider d. Both a and b e. All of the above

E

Which of the following reasons might explain why managed care organizations might be able to lower healthcare costs with premiums similar to fee-for-service plans? a. The lower health care costs of managed care plans may be offset by higher administrative costs. b. Managed care organizations may set their premiums just below that of their competitors. c. Managed care organizations may compete with one another based on service offerings rather than price. d. Both a and c e. All of the above

E

Which of the following represents an opportunity cost? a. Increases in medical technology b. Reduction in fees for Medicare patients c. Additional spending on public health initiatives d. Increased enrollments at medical schools e. Forgone geriatric care to provide additional maternity services

E

___________ occurs when more patients are treated by a new medical intervention. a. Income inequality b. Treatment substitution c. Social influence d. Environment impact e. Treatment expansion

E

____________ occurs when high-risk individuals subscribe to an insured group of low-risk individuals. a. Moral Hazard b. Asymmetric Information c. Rationality d. Scale Economies e. Adverse Selection

E

As consumers purchase more medical care, the marginal utility per dollar spend on medical care increases. T/F

F.

Advancements in medical technology allow people to obtain greater amounts of health with the same amount of medical care. T/F

T

Allowing physicians to patent and license practice strategies could help decrease price variations. T/F

T

An increase in the use of physician extenders would decrease costs of providing medical care. T/F

T

Demand for most medical services in the U.S. has been found to be inelastic. T/F

T

Health insurance mandates may result in market inefficiencies if the marginal cost of additional coverage exceeds the marginal benefit received. T/F

T

Increased consumer copayment requirements may help to reduce health care expenditures. T/F

T

Larger deductible requirements decrease the risk of moral hazard. T/F

T

Non-distribution constraints prevent not-for-profit organization from distributing profits to employees, managers, or company directors. T/F

T

Physicians are a scarce resource in health care markets. T/F

T

Since 1975, the uninsurance rate in the U.S. has increased. T/F

T

The majority of U.S. hospitals operate as non-profit organizations. T/F

T

The use of a larger discount rate will result in a lower present value when estimating the costs and benefits of a new medical technology. T/F

T

There is very little recent support for the existence of supplier-induced demand. T/F

T

Third-party payments provide incentives for the adoption of new technologies that may carry low benefits with high costs. T/F

T

Traditional fee-for-service payment mechanism provide incentives to over utilize medical care. T/F

T