CLNR 561 - Final Exam

Medical expenditures depend on the size of the available budget - or income, as do most other types of spending (housing, food, transportation, entertainment)

True

Medicare currently uses a prospective payment took the form of flat-rate reimbursement for hospitals based on principal diagnosis of the patient plus a number of adjustments.

True

People use medical care in combination with other inputs and their own time to produce good health.

True

Private or third-party insurance would not be necessary if everyone's medical expenses were near the average

True

The awarding of a patent provides the innovator with monopoly power - the ability to limit availability of the product and set prices above the marginal cost of production.

True

The drive for health care reform is more than an ideological challenge

True

The federal and state governments, private employers, and private health insures are key payers for the provision of health for Americans.

True

The goal of achieving a balance between access, affordability, and quality of health care remains elusive.

True

The income elasticity of medical care is measured by the percentage increase in spending relative to the percentage increase in income.

True

According to the latest estimates, the average pre-tax industry cost per new prescription drug approval (inclusive of failures and capital costs) is

$2,558 Million

When conducting a situational analysis of health care in the United States, which of the following are true?

- 20% believe there is a health care crisis - There are increasing numbers of uninsured people and underinsured people - 75% are satisfied with the medical care they currently receive - There are unprecedented levels of spending

The 'Triple Aim' presented in class includes

- Good access - High quality health care -Manageable spending

The affordable care act, which are under, had several key provisions including:

- Inserted government favored insurance options into the private health insurance market - created new federal taxes - expanded medical eligibility and created health insurance exchanges - expanded regulation of private health insurance

Which of the following is true pertaining to economics?

- It is a study of human behavior - It provides a systematic way of looking at a problem - It provides a rationale for the efficient allocation of scare resources - It is a way of thinking

Several theories, hypotheses, and causes were identified to better understand the consumption function and the disparity of income elasticity. These include

- Permanent income hypothesis - Public and private decisions concept - Budget contraints -Shared income hypothesis

Macroeconomics

- is the study of a national economy as a whole - includes unemployment rates, the GDP, national health, and the effects of international trade

Microeconomics

- is the study of economics at an individual, group or company level - focuses on issues that affect individuals and companies

Under the Resource-Based Relative Value Scale (RBRVS), physician payment is based on

- work effort measured by their own time, energy, and skill level - the overhead cost of their practice - professional liability insurance premiums

Which of the following have been associated with the high costs and barriers of new product development?

1. Competition for investigators and sites 2. Sponsor-imposed barriers 3. Difficulties in recruiting/retaining participants 4. Regulatory and administrative barriers 5. Barriers at academic institutions 6. Clinical research and medical care disconnect 7. Lengthy timelines 8. Barriers related to globalization

Scarcity and Choice

A. Not enough resources are available to meet all the desires of all the people, making rationing in some form unavoidable

The "Triple Aim" when speaking of health care encompasses

Access, affordability, quality

opportunity cost

B. Time and resources used to satisfy one set of desires cannot be used to satisfy another set

Marginal analysis

C. Consideration is given to the incremental benefits and incremental costs of a decision

Which of the following is closet to replicating the implicit logic of the health care market?

Cost-benefit analysis (CBA)

Self-interest

D. People are motivated to pursue efficiency in the production and consumption decisions they make

The two central macroeconomic issues of medical care are

Distribution and growth

What is the term used to describe the price when the quantity demanded equals the quantity supplied?

Equilibrium

According to the World Health Organization, health is simply the absence of disease.

False

FDA behavior as an attempt to minimize Type II error, mistakenly allowing a harmful drug onto the market before it has been fully tested and determined to be safe.

False

Health care reform and its associated impact of health care economics is a relatively new issue in the United States

False

The United States consistently leads the world with the longest life expectancy at birth and the lowest infant mortality rate.

False

Under the concept of risk pooling, the smaller the population insured - the more likely the risk is controlled.

False

Can the statistical probability of death among teenagers be compared to ordinary mortality among the retired elderly?

I do not believe the statistical probability of death among teenagers can be compared to the normal mortality of elderly. There was a specific cause or reason leading to the death of a young person. The mortality of an elderly person can be attributed to old age, as no one is going to live forever. Of course there are outside factors, however it is not reasonable to make a comparison to the probability of death of a teenager to an elderly person. The elderly person will always be much higher.

Is the effort expended to save one more life a total, average, or marginal cost?

In chapter 3, the choice of doing more or less is relevant to this question. This is based on seeing whether total benefits are likely to be greater than total costs. But its easier to look at this choice incrementally, by asking whether doing a bit more increases benefits more than it increases costs, this is defined as marginal costs. Which is the cost (all cost, not just money) of one additional unit to expend to save one more life.1 1. Getzen, Thomas E., Michael Kobernick. Health Economics and Financing, 6th Edition. Wiley, 2022. VitalBook file.

How much is too much to spend to save someone's life?

In chapter three, the author describes the value of life and how difficult it can be in certain times since there is no explicit market for postoperative pain and mortality. Economists do not put a value on life or illness, they measure the value that consumers put on life and illness as shown by their behavior.1 Ultimately, I believe there is not a set number of too much to spend on someone's life. There are many factors that come into play when deciding to extend someone's life and I think those should be quality of life, patients wishes, family's thoughts, and laws in place already. Each situation is different and should be looked at it that way. 1. Getzen, Thomas E., Michael Kobernick. Health Economics and Financing, 6th Edition. Wiley, 2022. VitalBook file.

Medical care is not the only factor that contributes to the production of health. Others factors include:

Income, environmental factors, genetics, education, lifestyle factors

Policies designed to control or contain costs include

Mandated fee schedules, global budgeting, resource rationing,

Programs and policies that increase access to medical care include

Medicaid, State Children's Health Insurance, Veterans Administration, Medicare, Defense Department

In most cases, the US government sponsors very little applied research - i.e., research whose purpose is typically the commercialization of a product.

True

Changes in behavior cause the expenditures of people with insurance to be greater than what an actuary would have predicted from observing the records of people without insurance, and this increase in loss is known as ______.

Moral hazard

Insurance companies

Neither supply nor consume, but pool risk and profit from handling funds

One QALY equals

One year in perfect health

Insurance is based on the concept of risk _________ (one word).

Pooling

The desire to replace an uncertain loss - the unknown future - with a steady and certain premium payment is known as __________.

Risk aversion

Methods for covering medical risks:

Savings, social insurance, charity, family & friends, private market insurance contracts

There would be no need to study economics is there was no ______________ of resources.

Scarcity

Is it more beneficial to screen high-risk or low-risk people for disease?

Since marginal benefits are generally declining and lower than the average benefits as health programs increase in size, the importance should be focused on those who most need it. Many useful medical technologies have become wasteful when they are expanded to include low risk individuals as this is really not needed.1 1. Getzen, Thomas E., Michael Kobernick. Health Economics and Financing, 6th Edition. Wiley, 2022. VitalBook file.

At higher levels of medical spending, the same increase in spending buys a _______ improvement in health status.

Smaller

What type of insurance programs are used when the informal obligations of society expressed in charitable giving are extended and are mandatory through the tax system.

Social

At low levels of overall medical spending, additional spending improves health status ________.

Substantially

Which of the following is true when marginal benefits equal marginal costs under economic optimization?

There is no more purchasing

Providers

Those that are reimbursed by a third party, on behalf of a group of patients rather than being paid directly

Patients

Those that receive care but do not directly pay for it

Economic optimization is discovering the best course of action given the given the decision-maker's goals and objectives.

True

Economic tools are used to determine the mostappropriate allocation of resources to healthand among competing health applications.

True

Macroeconomics of health care is concerned with large-scale, national system issues.

True

Through a network of nationally owned laboratories, such as the National Institutes of Health - NIH, and through grants to universities, government, and private philanthropy have taken a direct role in funding basic research - research whose purpose is to advance fundamental knowledge.

True

Under the Law of Demand, there is an inverse relationship between the amount a person will purchase and the sacrifice that must be made to obtain it.

True

Under the Law of Supply, there is a direct relationship between the amount a producer will make available and the reward that is received.

True

When using a macroeconomic perspective of medical care, i t is not just how much 'I' earn, but how much everybody else earns and contributes to "our" health insurance

True

With social insurance, who will pay, how much is paid, and who will receive the funds or services are determined by concerns common to all and by the political process rather than through individual choices made in the marketplace.

True

market based alternatives

a market based approach with consumer directed health plans

Is there necessarily a trade-off between health and money?

believe there is a trade-off between health and money. If someone can afford insurance and medical care you can make a general assumption that their health would relatively be better. Ideally that person goes to the doctor and receives care as needed. However, if someone cannot afford insurance and healthcare it would be appropriate to assume they do not visit the doctor often and this could lead to health concerns not being noticed sooner or that person not receiving treatment at all. In the PowerPoint, we go over methods of covering medical risks which includes savings, family and friends, charity, and insurance. If someone does not have access to money it makes their access to health that much more difficult.

managed competition

employees choose among competing plans

single payer national health insurance

insurance administer and financed by the government

mandated insurance coverage

insurance required through employers or individual plans

The economists position of the moral issue associated with health care reform is that we should strive toward the amount of care at which the benefit from the last unit received is just equal to its cost to society

true