Chapter 24

Three large groups of private insurance plans:

1. Fee for service 2. Health maintenance 3. preferred provider

Insurance companies use premiums for three things:

1. To pay doctor and hospital bills of their patients. 2. To cover administrative expenses 3. to provide profits for the owners of the insurance company

For the typical health insurance plan, the per person deductible ranges between Multiple choice question. $100 and $1,000. $7,000 and $9,000. $1,400 and $2,700.

1400-2700

In the United States in 2017, approximately _____ million people had no health insurance coverage at any time during the year. Multiple choice question. 29 68 112 51

29

The yearly maximum out of pocket on health insurance plans typically ranges from ______. Multiple choice question. $50,000 to $100,000 $10,000 to $20,000 $3,000 to $5,200

3000-5200

If you have a $2000 covered health expense, a deductible of $500, and a 20% co-pay, then you pay ________ and the insurance company pays ________. multiple choice $800; $1200 $1000; $1000 $700; $800 $1500; $500

800, 1200

Co-payment

Either a set amount or the percentage of the bill, after the deductible has been taken out, that you have to pay.

The tax that funds medicare appears on your paycheck in the same place your Social Security tax does; they are both under ____

FICA (Federal Insurance contributions act)

Under _____ , doctors are reimbursed at rates that are low relative to what Medicare pays.

Medicaid

3 Main Public insurance programs

Medicare Medicaid Children's Health Insurance Program (CHIP)

Primary Care physician (PCP)

Physician in managed care operations charged with making the initial diagnosis and making referrals. Also called a gatekeeper

Medicaid

Public health insurance in the United States that covers the poor

Medicare

Public health insurance in the United States that covers those over age 65

A ____ ____ person would look at the expected expense

Risk-neutral

Deductible

The amount of health spending a year that you have to pay before the insurance company pays anything.

Adverse selection

Those in most need of insurance are the most willing to pay for insurance and drive up the price of insurance with their illnesses to such a degree that those people who not as sick leave the market altogether.

Risk neutral

a characteristic of a person who would not pay extra to guarantee the expected outcome

Risk averse

a characteristic of a person who would pay extra to guarantee the expected outcome

Some form of health insurance covers _____ of people in the United Sates. Multiple choice question. only a minority a small majority a large majority

a large majority

Consider a supply and demand diagram for health care, with the demand curve constructed by ______ a low demand from the poor (Dpoor) with a high demand from the rich (Drich). In this model, the equilibrium quantity will have the _____ consuming most of the health care. Multiple choice question. comparing; rich adding; rich comparing; poor adding; poor

adding; rich

The requirement that individuals purchase insurance or be fined (mandation) is a method of dealing with the problem of _______. Multiple choice question. third-party payers asymmetric information adverse selection moral hazard

adverse selection

The situation where the people most in need of insurance drive up its price to the extent that those less in need of it leave the market is called ______. Multiple choice question. moral hazard adverse selection the third-party payer problem willful negligence

adverse selection

Third-party payer

an entity other than the consumer who pays part of the costs

Co-payments on insurance plans ______. Multiple choice question. are either a fixed amount or a percent of the bill after the deductible has been met are always a percent of the bill after the deductible has been met are always a fixed amount

are either a fixed amount or a percent of the bill after the deductible has bee met

Since most people do purchase insurance, it follows that most are risk______

averse

Any amount you have to pay toward a covered medical expense after you have already paid the deductible is your ______. Multiple choice question. co-payment defined contribution premium

co-payment

Suppose a major medical event costing $400,000 has a 0.5% chance of occurring while a 99.5% chance exists that you will incur $10,000 of ordinary medical expenses. In this case, your expected outlay is $11,950 ((.005 × $400,000) + (.995 × $10,000)). If you are risk neutral, you will ______ the opportunity to spend ______ than $11,950 for insurance. Multiple choice question. accept; more decline; less accept; less decline; more

decline; more

Solutions to the problem of adverse selection include all of the following except Multiple choice question. charging unhealthy people more for insurance than healthy people. forcing healthy people to purchase health insurance. disqualifying all but healthy people from buying insurance. having a system in which everyone gets insurance through some means other than individual choice.

disqualifying all but healthy people from buying insurance

Private insurance premiums pay for ______. (Select all that apply.) Multiple select question. doctor and hospital bills profit to the insurance company Medicaid CHIP administrative expenses Medicare

doctors and hospital bills profit to the insurance company administrative expenses

True or false: A health maintenance organization is the least controlling form of insurance. True false question. True/False

false

A ____ provider allows sick people to go to any doctor they want, wherever they want, for whatever ails them

fee-for-service

A primary care physician (PCP) is also known as a _____________

gatekeeper

moral hazard

having insurance increases the demand for the insured good

A type of insurance that directs patients to a narrow set of providers and requires patients to see gatekeepers is called a ______. Multiple choice question. independent practice association preferred provider organization fee for service health maintenance organization

health maintenance organization

A __________ requires that people see specific doctors at the beginning of any problem

health maintenance organization (HMO)

Consider a supply and demand diagram for health care, with the diagram showing a low demand from the poor (Dpoor) and a high demand from the rich (Drich). If in this model care was to become available to the poor at no cost, the new equilibrium quantity would be _____, with the amounts consumed by the rich and poor being, respectively, _____ and _____. Multiple choice question. lower; higher; lower higher; lower; higher higher; higher; lower

higher; lower; higher

In a supply and demand diagram of the health care market, the introduction of insurance with a co-pay requirement causes the demand curve to rotate out with (or against) a fixed _____ intercept, causing both price and quantity to _____. Multiple choice question. vertical; increase horizontal; increase horizontal; decrease vertical; decrease

horizontal; increase

Of the approximately $3.5 trillion spent in the United States on health care in 2017, the largest single amount represented payments to ______. Multiple choice question. drug companies medical researchers doctors hospitals

hospitals

The general thrust of the many provisions of the PPACA has been to _____ the costs associated with the provision of health care coverage. Multiple choice question. increase mask decrease eliminated

increase

Consider a supply and demand diagram for health care, with the diagram showing a low demand from the poor (Dpoor) and a high demand from the rich (Drich). If in this model care was to become available to the poor at no cost, the market demand would _____, the price of care would ____, and the equilibrium quantity would _____. Multiple choice question. decrease; fall; fall increase; rise; rise increase; rise; fall

increase; rise; rise

Consider a supply and demand diagram for health care, with the diagram showing a low demand from the poor (Dpoor) and a high demand from the rich (Drich). If in this model care was to become available to the poor at no cost, the market demand would _____, the price of care would ____, and the equilibrium quantity would _____. Multiple choice question. increase; rise; fall increase; rise; rise decrease; fall; fall

increase; rise; rise

The "affliction" of moral hazard _____ the demand for health care, driving prices _____.

increases; upward

By private health care standards, Medicare's premiums, deductibles, and co-payments are relatively Multiple choice question. low. similar. high.

low

Doctor payments under Medicaid are _____, which is why some doctors _____ Medicaid patients. Multiple choice question. low; refuse to treat the same as private insurance; refuse to treat high; actively recruit the same as private insurance; actively recruit

low; refuse to treat

The United States experiences ______ life expectancy and ______ infant mortality, at a ______ cost relative to other developed countries. Multiple choice question. lower; lower; higher lower; higher; higher lower; higher; lower higher; higher; higher

lower; higher; higher

The fear of an "insurance death spiral" is associated with the chance that the sick drive insurance costs up to the point that healthy people chose not to hold insurance, raising the average cost even more to those still in the pool. Preventing the healthy from dropping out is the purpose of ________

mandation

The government health insurance program for the poor is known as Multiple choice question. Medicare. Medicaid. ObamaCare. Med Alms.

medicaid

Because the sale of blood and organs for medical use is illegal in the U.S., the resulting shortage is _____ severe than would otherwise occur. Multiple choice question. more equally less

more

Suppose a major medical event has a 1% chance of occurring while a 99% chance exists that you will only have to spend $5,000 to cover typical medical expenses. In this case, your expected outlay is $6,950 ((.01 × 200,000) + (.99 × 5,000)). If you are risk averse, you are willing to pay _____ this sum to guarantee yourself that you do not have to pay any more. Multiple choice question. less than more than exactly

more than

A key provision of the PPACA was the mandate that insurance plans be offered to employees (or, if not, fines paid) by firms with ______. Multiple choice question. average wages under the poverty line more than 50 workers more than 50 full-time workers average wages greater than 400% of the poverty line

more than 50 full time workers

Insurers need to be required to accept those with pre-existing medical conditions rather than making acceptance optional otherwise they would multiple choice not cover standard tests. not want to insure those with conditions that are expensive to treat. only offer policies in states that did not have this provision only want to insure those with conditions that are expensive to treat.

not want to insure those with conditions that are expensive to treat

In 2017, spending in the United States on health-related goods and services was approximately _____ of GDP. Multiple choice question. one-third one-sixth one-tenth one-eighth

one-sixth

The type of insurance where certain doctors, hospitals, and other providers have negotiated fee reductions in exchange for a designation is called ______. Multiple choice question. fee for service health maintenance organization preferred provider organization independent practice association

preferred provider

The type of insurance where certain doctors, hospitals, and other providers have negotiated fee reductions in exchange for a designation is called ______. Multiple choice question. independent practice association fee for service preferred provider organization health maintenance organization

preferred provider organization

In a __________ people can choose the doctor they want from a list of doctors.

preferred provider organization (PPO)

You pay a ______ so that if something bad happens to you the insurance provider will pay to make things better.

premium

The vast majority of private sector spending on health care comes from ______. Multiple choice question. the pockets of those receiving care government premiums paid to insurance companies physicians

premiums paid to insurance companies

Patients in a health maintenance organization must see a doctor called a ______ before seeing a specialist. Multiple choice question. nurse primary care physician nurse practitioner cardiologist

primary care physician

Individuals willing to pay extra to guarantee an expected outcome are said to be ______. Multiple choice question. risk alert risk averse nervous nellies risk neutral

risk adverse

For the average person, the cost of insurance over a lifetime will be more expensive than the problem being insured against. This is why insurance is only purchased by _____ individuals. Multiple choice question. risk neutral irrational risk averse

risk averse

Individuals unwilling to pay extra to guarantee an expected outcome are said to be ______. Multiple choice question. irrationally exuberant risk neutral gamblers risk averse

risk neutral

single-payer system

the government collects (usually very high) taxes to pay for everyone's health care.

The U.S. health care market provides Americans with an overall quality of care that is Multiple choice question. about average for developed countries. the highest in the world. much below the level found in other rich countries.

the highest in the world

Maximum out of pocket

the most that a person or family will have to pay over a year for all covered health expenses

mandation

the requirement to purchase insuranc

The vast majority of private sector spending on health care comes from ______. Multiple choice question. the pockets of those receiving care government premiums paid to insurance companies physicians

willing to pay extra to guarantee an expected outcome